United States v. William J. Davis ( 2006 )

SUTTON, J., delivered the opinion of the court, in which BOGGS, C. J., joined.

KEITH, J. (pp. 500-05), delivered a separate dissenting opinion.

OPINION

SUTTON, Circuit Judge.

After a jury convicted William Davis of two counts of bank fraud, the district court calculated a guidelines sentencing range of 30 to 37 months. After considering the § 3553(a) factors, the court imposed a sentence of one day in prison because Davis was 70 years old at the time of sentencing and because he had committed the underlying crimes 14 years earlier. Unable to conclude that this variance is reasonable, we reverse.

I.

In 1990, Davis applied for and received a $1.6 million line of credit from a local bank for Fries Correctional Equipment of Kentucky, Inc., a business in which he was a part owner and president. United States v. Davis, 397 F.3d 340, 342 (6th Cir.2005). Davis agreed to be a personal guarantor for the line of credit. Id. When the bank renewed the line of credit in 1991, Davis submitted a financial statement that omitted a $100,000 debt he had incurred during the previous year.

Fries Correctional defaulted on the loan in 1992, and the bank, invoking the personal guarantee, filed a civil action against Davis. In April 1992, during a deposition in the civil action, Davis claimed that he no longer owned several securities listed in a July 1991 financial statement. Other financial documents, however, showed this statement to be false, revealing that he had continued to own the securities until October 1992, when he sold them.

In 1992, Davis and his wife declared bankruptcy. And in August 1993, the federal government notified Davis that it intended to “initiate criminal proceedings against him” as a result of the defaulted loan. Id. at 342. When the Davis bankruptcy ended in 1996, the bank had yet to recover roughly $600,000 in loan proceeds.

On December 15, 1999, the government indicted Davis. And on May 23, 2002, a jury convicted him of two counts of bank fraud — one relating to the omission of the $100,000 loan from his 1991 financial statement, the other relating to the false statements he made during his April 1992 deposition.

In August 2003, the district court sentenced Davis. Applying the then-mandatory guidelines, it used a base-offense level of 6 and added 14 levels due to the amount of the loss. The court rejected Davis’s requests for a downward departure based on:

(1) acceptance of responsibility, see JA 381 (noting that Davis had “contested the facts and ... the implications to be drawn from them”);

(2) post-conduct rehabilitation, see JA 384-85 (“There, quite frankly, is no evidence that this defendant now is an improved human being over what he was before this offense .... ”); JA 387 (citing Davis’s testimony at sentencing as an additional justification for denying the departure and noting that the testimony “was not as candid as perhaps it could be”);

(3) the government’s delay in bringing the indictment, see JA 392 (“It would be difficult to say that a prosecution brought within the applicable statute of limitations is something outside the heartland of cases and beyond the thinking of the framers of the guidelines.”); and

(4) the claim that the guideline range did not accurately reflect the seriousness of the offense, see JA 384 (noting that the séntencing range did not overstate the seriousness of the offense).

All of this left Davis with a guidelines range of 33 to 41 months. “Normally,” the court noted,- it “would be inclined to sentence in the middle or upper reaches of the guideline range,” but it decided to impose a 33-month sentence on each of the two counts (to run concurrently) and 5 years of supervised release. JA 394-95. In choosing the low end of the guidelines range, the court relied on Davis’s age at the time (68) and the delay between the bank fraud and sentencing (12 years). The court did not impose restitution because Davis could not afford it.

On appeal, this court affirmed Davis’s conviction but remanded the case for re-sentencing. As to the sentencing aspect of its decision, the court reasoned that the district court had calculated the sentence under the 2002 Guidelines Manual instead of the more-lenient version in effect when Davis committed the offense (the 1991 version), and that the court’s imposition of a sentence under mandatory guidelines violated United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). See Davis, 397 F.3d at 350-52.

On April 29, 2005, the district court re-sentenced Davis. Using the 1991 version of the guidelines, the district court set Davis’s base offense level at 6, then applied an 11-level enhancement due to the amount of the loss, see U.S.S.G. § 2F1.1 (1991), then added a 2-level enhancement for more-than-minimal planning in committing the offense, see id. § 2F1.1(b)(2). After concluding that Davis did not deserve a downward departure, the court determined that his criminal history category (I) and his offense level (19) generated an advisory guidelines range of 30 to 37 months. See JA 408.

The court then applied the factors listed in 18 U.S.C. § 3553(a) in exercising its independent judgment whether to deviate from the guidelines range. It first considered Davis’s characteristics and history, see § 3353(a)(1), noting his age (“70 years and seven months”), that he was retired and had “moved back to Ohio to be near his family and his grandchildren” and that he had one prior offense (which was committed when he was a young man), JA 409. The court turned to the offenses of conviction, see § 3553(a)(1), which the court recognized were “serious when committed” and that “they remain serious,” JA 409. The court pointed out, however, that the offenses had been committed “14 years ago.” Id. It also noted that the defendant’s “age and the length of time between the commission of the offenses and the date of sentencing” warranted consideration after Booker even though they were “not proper” to consider as grounds for a downward departure from the guidelines. Id.

In addressing “the public’s interest in safety,” see § 3553(a)(2)(C), the court concluded that “the public is in no danger from this defendant” because Davis is “retired,” “[h]e does not control a business and in all probability has no desire to do so,” JA 409-10. As for punishment, see § 3553(a)(2)(A), the court noted that “punishment to be effective must be reasonably close to the offense committed or it becomes, while not cruel and unusual, it becomes, I think, doubly erroneous,” JA 410. The court was also “satisfied that the factors that [it] set forth ... are such that the sentence ... will not promote disrespect for the law.” Id. See § 3553(a)(2)(A). As for deterrence, see § 3553(a)(2)(B), the court concluded that any sentence — -whether it was “a day ... [or] 10 years or anything in between”— “would be sufficient to deter this defendant from committing further crimes,” JA 411. Because the court believed that “the factors in this case are unique enough,” it concluded “that others who might be inclined to commit bank fraud are not likely to engage in that course of conduct in the hope that they will be treated as leniently” as the defendant. Id. The district court reasoned that the public’s interest in rehabilitation, see § 3553(a)(2)(D), was well-served because “the defendant” has been, “in effect, rehabilitated by the passage of time,” JA 411. The potential for “disparity in sentence between persons similarly situated who commit certain crimes,” see § 3553(a)(6), was likewise not a concern because “[i]n th[e] Court’s opinion, and recollection, it has dealt with very few 70-year-old people who were brought before the Court for sentencing 14 years after the fact,” JA 411-12. Restitution also was not an issue because, as the court had found at Davis’s original hearing (a finding the government did not appeal), Davis had no ability to pay restitution.

Taking all of these considerations into account, the court sentenced Davis to one day in prison for each of the two bank-fraud counts (running concurrently and with credit for the one day served when the U.S. Marshals took him into custody), three years of supervised release (including one year of home confinement) and 100 hours of community service.

II.

On appeal, the government argues that the district court’s imposition of a one-day sentence is “unreasonable[ ].” United States v. Booker, 543 U.S. 220, 261, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). We agree.

In reviewing challenges to criminal sentences after Booker, whether filed by a defendant or the government, see 18 U.S.C. §§ 3742(a), (b), we have distinguished between the procedural and substantive reasonableness of sentences. See, e.g., United States v. Webb, 403 F.3d 373, 383 (6th Cir.2005). And thus far, in invalidating sentences imposed after Booker, we have done so only because the sentence was procedurally unreasonable — because, say, the district court did not appreciate the non-mandatory nature of the guidelines, see, e.g., United States v. Beasley, 442 F.3d 386, 394-95 (6th Cir.2006), did not correctly calculate the sentencing range under the guidelines, see, e.g., United States v. Hazelwood, 398 F.3d 792, 801 (6th Cir.2005), or did not consider the § 3553(a) factors, see, e.g., United States v. Ouwenga, 173 Fed.Appx. 411, 418 (6th Cir.2006).

Today, however, we face a sentence that satisfies each of these procedural requirements and indeed can fairly be described as a thorough application of the § 3553(a) factors by an experienced and well-regarded district court judge. He used the appropriate version of the guidelines and correctly calculated the advisory guidelines range. He considered the availability of guidelines departures and decided against applying any. And he exercised the discretion that Booker gives him by independently considering and faithfully attempting to apply each of the § 3553(a) factors to impose “a sentence sufficient, but not greater than necessary, to comply with the purposes set forth in” § 3553(a)(2).

Under these circumstances, one might fairly ask what role appellate judges still ought to have in reviewing such sentences. We did not preside over the (two) sentencing hearings. Nor did we have a chance to face the defendant (twice) and listen to him (twice). And the district court satisfied every procedural requirement we have established in this area.

Booker’s requirement that appellate courts review sentences for “reasonableness,” however, involves more than ensuring that district courts appreciate their sentencing discretion and issue mechanically correct sentences. In Booker itself, the Court indicated that reasonableness review will permit appellate courts to minimize sentencing disparities between and among district courts (and between and among courts of appeals). See 543 U.S. at 263, 125 S.Ct. 738 (noting that appellate review permits “sentencing differences” to be “iron[ed] out”). And one of the principal functions of § 3553(a) cannot be accomplished without such review — eliminating sentencing “disparities among defendants with similar records who have been found guilty of similar conduct.” § 3553(a)(6). For while district courts no doubt can ensure that they satisfy § 3553(a)(6) as to defendants who come before them, they cannot eliminate unwarranted disparities circuit-wide.

Even though Booker’s remedial opinion principally “empowered district courts, not appellate courts,” and “sentencing courts, not the Sentencing Commission, retain the ultimate authority within reason to apply the § 3553(a) factors to each criminal defendant,” United States v. Buchanan, 449 F.3d 731, 741 (6th Cir.2006) (Sutton, J., concurring), Booker still requires appellate courts to review sentences for abuses of that discretion in the form of substantively unreasonable sentences, see United States v. Cage, 451 F.3d 585, 591 (10th Cir.2006) (invalidating a six-day sentence that varied from the advisory guidelines range of 46 to 57 months and noting that “[e]ven if a sentence is calculated properly, i.e., the Guidelines were properly applied and the district court clearly considered the § 3553(a) factors and explained its reasoning, a sentence can yet be unreasonable”); United States v. Zapete-Garcia, 447 F.3d 57, 59 (1st Cir.2006) (stating that appellate review of a “chosen sentence for reasonableness” involves looking for “a plausible explanation and a defensible overall result”) (emphasis added); see also Hon. James G. Carr, Some Thoughts on Sentencing Posh-Booker, 17 Fed. Sentencing Rep. 295, 296 (2005) (“[A]ppellate review of sentences ... will continue to be of critical importance in controlling the discretion of District Judges and reducing disparity among District Judges in the Circuits.”) (footnotes omitted).

In reviewing sentences for substantive reasonableness, we do not start from scratch, filling each sentencing vacuum with our own impressions of what makes intuitive sense on a given day. Because the question at hand is whether the sentence is reasonable in light of the § 3553(a) factors, because one of those factors requires consideration of the guidelines sentencing range, § 3553(a)(4), and because the guidelines ultimately purport to account for most, if not all, of the § 3553(a) factors, compare 28 U.S.C. § 991(b)(1)(B) with 18 U.S.C. § 3553(a)(6); compare 28 U.S.C. § 991(b)(1)(B) with 18 U.S.C. § 3553(a), our review starts with the sentencing estimate provided by the Sentencing Commission for certain types of crimes and certain types of criminals. When the district court issues a within-guidelines sentence — when the independent views of the sentencing judge and the Sentencing Commission align — we apply a presumption of reasonableness to the sentence. United States v. Williams, 436 F.3d 706, 708 (6th Cir.2006). And like every court of appeals to consider the question, we take the view that when the district court independently chooses to deviate from the advisory guidelines range (whether above or below it), we apply a form of proportionality review: “the farther the judge’s sentence departs from the guidelines sentence ... the more compelling the justification based on factors in section 3553(a)” must be. United States v. Dean, 414 F.3d 725, 729 (7th Cir.2005); see also United States v. Martin, 455 F.3d 1227, 1235 (11th Cir.2006); United States v. Smith, 445 F.3d 1, 4 (1st Cir.2006); United States v. Moreland, 437 F.3d 424, 434 (4th Cir.2006); United States v. Duhon, 440 F.3d 711, 715 (5th Cir.2006); United States v. Lazenby, 439 F.3d 928, 932 (8th Cir.2006); United States v. Cage, 451 F.3d 585, 594 (10th Cir.2006).

New would disagree that we have an extraordinary variance in this case — from a guidelines range of 30 to 37 months to one day, to what the government refers to as a 99.89% variance — so the question is whether extraordinary circumstances justify the full amount of the variance. Not here, in our view.

One of the featured grounds for the variance — the 14-year gap between Davis’s crimes and his second sentencing hearing — does not support such a dramatic variance (and indeed may not support a variance at all). Time intervals of this sort appear nowhere in the list of § 3553(a) factors. The underlying prosecution occurred within the statute-of-limitations period. And Davis has not raised any speedy-trial objections to the prosecution. Nor, at any rate, is it invariably clear when a legal delay in prosecuting or sentencing an individual becomes a Mend or foe of the defendant. What criminal suspect, after all, wants the government (and grand jury) to pull the indictment trigger too quickly? And how often do elderly criminal defendants such as Mr. Davis seek expedited sentencing?

But even to the extent such a delay by itself might legitimately bear on a trial court’s exercise of sentencing discretion (a point we need not decide), reliance on this factor at a minimum should require some evidence that the government bears unjustified responsibility for the delay and the defendant suffered from the delay. As the district court itself noted in issuing this sentence, however, any delays in indicting and prosecuting Davis flowed from “very practical reasons,” not “any malicious motive” on the part of the government. JA 410.

Consistent with the district court’s understanding, most if not all of the 14-year delay- — between 1991 when Davis omitted a $100,000 debt on a financial statement to the bank and the April 2005 sentencing— was caused by legitimate considerations. One of the intervening years hardly counts because the second fraudulent act did not occur until 1992, when Davis did not disclose his continued ownership of certain securities. Another four years should not factor into the equation because the government could not know the extent of the loss from the fraud (and Davis’s ability to repay the debt) until the end of Davis’s bankruptcy in 1996. While the government took another three years to indict him (though it still acted within the statute of limitations), the record offers no suggestion that the three years were used for anything other than ensuring that the financial records showed that a fraud had occurred and that the government wished to exercise its prosecutorial discretion in bringing the charges. Another three years or so involve the gap between the indictment and jury conviction in 2002, but again Davis presumably consented to this delay as he does not bring a speedy-trial challenge. Another year was occupied with preparing for the sentencing hearing, a proceeding that Davis apparently (and understandably) made no effort to expedite. And the two years between his first sentencing hearing (2003) and his second (2005) stemmed from Davis’s success in making a Booker argument (among other arguments) on appeal.

Delays between the time a crime is committed and the time a guilty defendant serves his sentence of course should not be casually ignored. But the question here is not whether the delay violated Davis’s statutory or constitutional rights or even whether the delay undermined the federal government’s efforts to vindicate the purposes of this criminal statute. The question is whether the delay supplies an independent reason for such a marked deviation from the advisory guidelines range. The district court concluded that the delay did not authorize a downward departure either before Booker or after, and we agree. Neither, however, do we see how the delay favors such a dramatic variance when there has been no finding of government misconduct and no finding that the delay prejudiced the defendant. To be sure, an interval of years between a crime and the commencement of a sentence may affect the application of certain § 3553(a) factors. Time, for example, may allow a defendant to make whole all of the victims of his crime, or it may allow him to show demonstrable signs of rehabilitation. But, on this record, we are unpersuaded that the passage of time by itself justified a variance in this case, let alone a 99.89% variance.

What the delay principally did when it comes to the § 3553(a) factors was to allow the defendant to age — and age, the second reason for the district court’s variance, may indeed be a legitimate basis for a variance. The defendant was 56 when he committed the first crime, and he was 70 at the time of the second sentencing hearing. When he committed the crime, he thus was of an age that would not likely have an impact on a guidelines range of 30 to 37 months. And when he was eventually sentenced, he was of a certain age (and retired from the profession from which he participated in the bank fraud) that might affect a trial judge’s decision to grant a variance.

True, the guidelines said in 1991 (and similarly say today) that “[a]ge ... is not ordinarily relevant in determining whether a sentence should be outside the applicable guideline range.” U.S.S.G. § 5H1.1 (1991); see U.S.S.G. § 5H1.1 (2004). That is why the district court correctly concluded at Davis’s first and second sentencing hearings that he could not grant a downward departure based on Davis’s age. But a trial judge’s authority to exercise independent judgment in granting a variance after applying the § 3553(a) factors differs from his authority to grant departures. For example, while § 3553(a)(5) directs a sentencing court to consider “any pertinent policy statements]” issued by the Sentencing Commission (which would include the age-as-a-discouraged-factor provision), § 3553(a)(1) directs a sentencing court to consider the “history and characteristics of the defendant.” In an appropriate case, a trial court, in exercising the “broad discretion” that Booker gives it “in imposing a sentence within a statutory range,” 543 U.S. at 233, 125 S.Ct. 738, has a freer hand to account for the defendant’s age in its sentencing calculus under § 3353(a) than it had before Booker. See United States v. Smith, 445 F.3d 1, 5 (1st Cir.2006) (holding that district court’s consideration at sentencing of defendant’s age was not inappropriate and noting that even though “a factor is discouraged or forbidden under the guidelines,” that “does not automatically make [the factor] irrelevant when a court is weighing the statutory factors apart from the guidelines”); cf. United States v. Moreland, 437 F.3d 424, 436 n. 8 (4th Cir.2006).

To say that a district court may account for a defendant’s age at sentencing, however, is not to say that Davis’s age (70) warrants a one-day sentence. The record shows that the fraud caused over $900,000 in loss; Davis did not repay the lost money; he did not accept responsibility for the crimes; and he has yet to show remorse for the crimes. While the district court stated that the sentence still would promote respect for the law, it never explained how that could be so given these sentencing facts — facts that the district court did not discuss in explaining this component of its ruling. While the district court stated that the defendant has been “rehabilitated ... by the passage of time,” JA 411, it did not point to any evidence of rehabilitation in the record, including what one would assume represents a first step of rehabilitation — contrition for the crime. While the district court indicated that this sentence would serve the goals of societal deterrence, see 18 U.S.C. § 3553(a)(2)(B), it is hard to see how a one-day sentence for a lucrative business crime satisfies that goal. See Martin, 455 F.3d at 1239 (“Because economic and fraud-based crimes are more rational, cool, and calculated than sudden crimes of passion or opportunity, these crimes are prime candidates for general deterrence.”) (internal quotation marks and brackets omitted). And while age may well be an appropriate factor in choosing to grant a downward variance, the notion that the status of being 70 years old makes serving any prison time pointless is far from self-evident. Cf. United States v. Tocco, 200 F.3d 401, 434 (6th Cir.2000) (“[E]ight judges of this court, still in service, are seventy years old or older. Many persons in business continue to serve in important capacities beyond seventy years of age.”). In the end, the district court gave little, if any, discernible weight to the guidelines range and its explanations for deviating from that range fail to justify the magnitude of the variance.

Perhaps most problematically, the sentence represents the most extreme variance possible, leaving no room to make reasoned distinctions between Davis’s variance and the variances that other, more worthy defendants may deserve. Cf. United States v. Haack, 403 F.3d 997, 1005 (8th Cir.2005) (noting in a pre-Booker setting that “[a] departure of this extent,” 120 months to 78 months, “leaves little room for greater departures for defendants” who present even more compelling reasons for leniency); Moreland, 437 F.3d at 437 (“If Moreland’s circumstances are so compelling as to warrant a two-thirds reduction from the bottom of the advisory guideline range, it is difficult to imagine any meaningful limit on the discretion of the district court.”). Consider the possibilities for other defendants in this area; those who paid restitution; those who accepted responsibility for the crime and showed remorse for committing it; those who used the time between the commission of the crime and sentencing to engage in other acts demonstrating rehabilitation; and, with respect to elderly defendants, those who had become infirm in the intervening years.

One of the central reasons for creating the sentencing guidelines, moreover, was to ensure stiffer penalties for white-collar crime and to eliminate disparities between white-collar sentences and sentences for other crimes. See United States v. Brewer, 899 F.2d 503, 508 (6th Cir.1990) (citing Stephen Breyer, The Federal Sentencing Guidelines and the Key Compromises Upon Which They Rest, 17 Hofstra L.Rev. 1, 20-22 (1988) & U.S.S.G. Ch. 1, Pt. A (Introduction)) (noting that the guidelines were an attempt by the Sentencing Commission to address discrepancies and inequities between sentences for white-collar crimes and other crimes), overruled in part on other grounds by Koon v. United States, 518 U.S. 81, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996); Martin, 455 F.3d at 1240 (“The fact that Martin’s guidelines range was 108-135 months’ imprisonment evinces Congress’s attempt to curb judicial leniency in the area of white collar crime.”). A one-day sentence for this bank fraud conviction necessarily slights this worthy goal.

In asking us to affirm his sentence, Davis fails to direct our attention to a single case in which a downward variance of this proportion was affirmed. At the same time, numerous courts have invalidated sentences with less glaring (downward and upward) variances from the guidelines. See, e.g., United States v. Thurston, 456 F.3d 211, 212, 220 (1st Cir.2006) (reversing as unreasonable a sentence of 3 months when the advisory guidelines called for 60 months and identifying 36 months as the minimum sentence that could withstand reasonableness); United States v. Smith, 445 F.3d 1, 5-6 (1st Cir.2006) (reversing as unreasonable a sentence of 46 months when the advisory-guidelines range was 100 to 125 months); United States v. Eura, 440 F.3d 625, 630-34 (4th Cir.2006) (reversing as unreasonable a sentence of 60 months when the advisory guidelines range was 78 to 97 months); United States v. Moreland, 437 F.3d 424, 434-37 (4th Cir.2006) (reversing as unreasonable a sentence of 120 months when the advisory guidelines range was 360 months to life); United States v. Lazenby, 439 F.3d 928, 932-33 (8th Cir.2006) (reversing as unreasonable a sentence of 12 months when the advisory guidelines range was 70 to 87 months); United States v. Cage, 451 F.3d 585, 587 (10th Cir.2006) (reversing as unreasonable a sentence of 6 days when the advisory guidelines range was 46 to 57 months); United States v. Martin, 455 F.3d 1227, at 1234, 2006 WL 1889902, at *1 (11th Cir. July 11, 2006) (reversing as unreasonable a sentence of 7 days when the advisory guidelines range was 108 to 135 months); cf. United States v. Crisp, 454 F.3d 1285, 1289 (11th Cir.2006) (reversing as unreasonable a sentence of 5 hours’ detention when the advisory guidelines range was 12 to 15 months); see also United States v. Zapete-Garcia, 447 F.3d 57, 60 (1st Cir.2006) (reversing as unreasonable a sentence of 48 months when the advisory guidelines range was 0 to 6 months); United States v. Davenport, 445 F.3d 366, 372 (4th Cir.2006) (reversing as unreasonable a sentence of 120 months when the advisory guidelines range was 30 to 37 months); United States v. Kendall, 446 F.3d 782, 784 (8th Cir.2006) (reversing as unreasonable a sentence of 84 months when the advisory guidelines range was 27 to 33 months); cf. Some Thoughts on Sentencing Posi-Booker, 17 Fed. Sentencing Rep. at 296 (“[A] critical factor that must be taken into account when evaluating how well or properly judges exercise their discretion when departing from the Guideline range ... [is] the extent to which judicially initiated departures are outside the applicable range. There is a sizable difference between a 10 or 20 percent variance from a Guideline minimum or maximum and a variance of 50, 60, or 80 percent.”).

No doubt, the district court retains ample discretion to grant Davis a variance on this record. And it will have an opportunity to do so on remand. But, for the reasons given, even the most animated application of the parsimony requirement — that the district court impose “a sentence sufficient, but not greater than necessary, to comply with the purposes set forth in” § 3553(a)(2) — cannot justify a one-day sentence in this case. To rule otherwise, we respectfully submit, would intimate that reasonableness review is a theory, not a practice, and would fairly leave litigants wondering what downward (or upward) variances exceed a district court’s discretion if a 99.89% downward variance on less-than-extraordinary facts lies within that discretion. Modest though reasonableness review may be, it is not non-existent.

III.

For these reasons, we reverse and remand the case for resentencing.