United States v. Cruzado-Laureano

United States Court of Appeals
For the First Circuit
No. 05-1822
UNITED STATES OF AMERICA,
Appellee,
v.
JUAN MANUEL CRUZADO-LAUREANO, a/k/a Manny,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Boudin, Chief Judge,
Stahl, Senior Circuit Judge,
and Lynch, Circuit Judge.
Alexander Zeno for appellant.
Thomas F. Klumper, Assistant United States Attorney, with
whom H. S. Garcia, United States Attorney, and Nelson Pérez-Sosa,
Assistant United States Attorney, were on brief, for appellee.
March 14, 2006
STAHL, Senior Circuit Judge. In 2002, a jury convicted
Juan Manuel Cruzado-Laureano, the former mayor of Vega Alta, Puerto
Rico, on a broad slate of corruption-related charges. Through a
variety of schemes, Cruzado extorted funds from government
contractors and embezzled funds that belonged in the city coffers.
Although we sustained his convictions in an earlier appeal, we
vacated his sentence because it was imposed under the wrong version
of the United States Sentencing Guidelines. After resentencing,
Cruzado is back before us in this appeal, contesting the
applicability of particular provisions of the Guidelines to the
facts of his case. In large part, the district court acted
properly in imposing Cruzado's sentence. However, we find that the
district court impermissibly increased Cruzado's sentence on the
basis of two provisions that dealt with his abuse of his elected
office. We therefore vacate the sentence and once again remand for
re-sentencing.
I. Background
This case comes to us on appeal for the second time. The
facts of the case are laid out extensively in our prior opinion,
see United States v. Cruzado-Laureano, 404 F.3d 470, 473-80 (1st
Cir. 2005), and we need not rehearse them here in any great detail.
Briefly put, Juan Manuel "Manny" Cruzado-Laureano has had a varied
career. A high-school mathematics teacher for seven years early on
in life, Cruzado later worked 16 years in the construction
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industry, four as an administrator in his wife's dental practice,
and five as the owner and manager of a check-cashing business. In
November 2000, Cruzado was elected mayor of Vega Alta, a
municipality in Puerto Rico. Almost immediately after taking
office, Cruzado began extorting and laundering money by, among
other things, demanding kickbacks on municipal contracts and
redirecting funds intended for the government into his own pocket.
Cruzado would clear the extorted money through his own bank
account, through his old check-cashing business (now owned by his
son), or through the accounts at his wife's dental practice. The
Federal Bureau of Investigation began investigating Cruzado's
conduct in 2001, and an initial indictment was issued in October of
that year. During the course of the investigation and after the
initial indictment was handed down, Cruzado compounded his legal
troubles by attempting to tamper with three potential witnesses
against him.
A 14-count superseding indictment was returned on January
25, 2002. The indictment charged Cruzado with one count of
embezzlement under 18 U.S.C. § 666(a)(1)(A)(i) and (a)(1)(A)(ii)
(2000); six counts of extortion under § 1951(a); six counts of
money laundering under § 1956(a)(1)(B)(i) and (a)(1)(B)(ii); and
one count of tampering with a witness under § 1512(b)(1) and
(b)(2). After the close of evidence, the court dismissed one of
the money-laundering charges, and the jury eventually returned a
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verdict of not guilty on one of the extortion charges. Cruzado was
convicted by the jury on each of the remaining twelve charges.
The district court imposed a 63-month sentence.1 In his
earlier appeal, Cruzado unsuccessfully challenged his conviction on
a number of grounds not relevant here. Cruzado prevailed, however,
on his claim that the district court applied the wrong version of
the Sentencing Guidelines. The court had sentenced Cruzado under
the 2000 edition of the Guidelines. We held that it ought to have
relied on the 2002 Guidelines, and so vacated the sentence and
remanded the case for resentencing. On remand, the court performed
the sentencing calculation anew under the 2002 Guidelines.2
Section 2C1.1 of the Guidelines provides sentencing
guidance for "Offering, Giving, Soliciting, or Receiving a Bribe;
Extortion Under Color of Official Right," and § 2S1.1 for
"Laundering of Monetary Instruments; Engaging in Monetary
Transactions in Property Derived from Unlawful Activity." Money
laundering is, generally speaking, a derivative offense: money
needs to be laundered because it was illegally derived. In
recommending a sentence for money laundering under § 2S1.1, the
1
The court also imposed a one-year sentence for the
witness-tampering charge, to run concurrently with the 63-month
sentence imposed for the rest of the charges.
2
The court imposed the new sentence after the Supreme Court's
decision in United States v. Booker, 543 U.S. 220 (2005), which
rendered the Guidelines advisory. It nevertheless imposed
sentence based on the Guidelines recommendation.
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Guidelines take as the base offense level the full computed offense
level relevant to the underlying offense. In making its sentencing
calculation, the district court proceeded by:
1) turning from the money laundering provision, § 2S1.1,3 to
the provision for the underlying offense, § 2C1.1;4
2) determining the base offense level for extortion offenses
under § 2C1.1(a);
3) adjusting that level upward according to the rules for
specific offense characteristics applicable under the
extortion guideline, § 2C1.1(b);
4) taking the resulting final offense level for extortion as
the base offense level for money laundering under §
2S1.1(a);
5) applying additional enhancements specified by the money
laundering guideline under § 2S1.1(b);
3
In the 2002 Guidelines Manual, § 2S1.1 read in relevant part:
"Base Offense Level: . . . The offense level for the underlying
offense from which the laundered funds were derived . . . ," §
2S1.1(a)(1); "If the defendant was convicted under 18 U.S.C. §
1956, increase by 2 levels," § 2S1.1(b)(2)(B).
4
In 2002, § 2C1.1 read in relevant part: "Base Offense Level:
10," § 2C1.1(a); "If the offense involved more than one bribe or
extortion, increase by 2 levels," § 2C1.1(b)(1); "If the offense
involved a payment for the purpose of influencing an elected
official or any official holding a high-level decision-making or
sensitive position, increase by 8 levels," § 2C1.1(b)(2)(B).
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6) applying additional enhancements under relevant general
adjustment provisions laid out in Chapter Three of the
Guidelines Manual.
Thus, the district court started with a base offense
level of 10, specified by § 2C1.1(a) as the base offense level for
extortion. It applied a two-level enhancement under § 2C1.1(b)(1)
because the offense involved more than one incident of extortion,
and an eight-level enhancement under § 2C1.1(b)(2)(B) because the
extortion involved a payment for the purpose of influencing an
elected decision-making official. The final offense level under §
2C1.1 was thus 20. Under § 2S1.1(a), level 20 became the base
offense level for the money laundering, to which the court applied
an additional two-level enhancement under § 2S1.1(b)(2)(B) because
the offense involved a conviction under the money laundering
statute, 18 U.S.C. § 1956.
The court then turned to the general-purpose adjustment
provisions of Chapter Three, and found two applicable. The court
applied a two-level enhancement for abuse of a position of public
trust under § 3B1.3,5 and another two-level enhancement for
5
In 2002, § 3B1.3 read in relevant part: "If the defendant
abused a position of public or private trust, or used a special
skill, in a manner that significantly facilitated the commission or
concealment of the offense, increase by 2 levels. This adjustment
may not be employed if an abuse of trust or skill is included in
the base offense level or specific offense characteristic." §
3B1.3.
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obstruction of justice under § 3C1.1.6 Cruzado's final offense
level under these calculations was 26, and the court determined
that he fell into criminal history category I. Taken together, the
offense level and criminal history category produced a recommended
sentence of 63-78 months. See USSG Ch.5, Pt.A (Sentencing Table).
This recommended sentence was no shorter and potentially longer
than the 63 months to which Cruzado had originally been sentenced.
The court decided that Cruzado ought not to suffer for having
exercised his right of appeal, and imposed a sentence identical to
the one earlier imposed. Cruzado timely brought this appeal,
challenging the district court's application of several provisions
of the Guidelines.7
II. Legal Challenges
On a challenge to a sentence imposed on the basis of a
Guidelines recommendation, we "determine the legal meaning of
6
In 2002, § 3C1.1 read: "If (A) the defendant willfully
obstructed or impeded, or attempted to obstruct or impede, the
administration of justice during the course of the investigation,
prosecution, or sentencing of the instant offense of conviction,
and (B) the obstructive conduct related to (I) the defendant's
offense of conviction and any relevant conduct; or (ii) a closely
related offense, increase the offense level by 2 levels." § 3C1.1.
7
Cruzado also challenges the court's order requiring payment
of restitution and a fine, and ordering supervised release, but in
too perfunctory a manner to permit us to evaluate the merits of
those aspects of his punishment. "[I]ssues adverted to in a
perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived." United States v. Zannino, 895
F.2d 1, 17 (1st Cir. 1990).
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Guidelines provisions de novo." United States v. Robinson, 433
F.3d 31, 35 (1st Cir. 2005).
A. Extortion by an Elected Official
The district court increased Cruzado's offense level by
eight points under § 2C1.1(b)(2)(B), which states: "If the offense
involved a payment for the purpose of influencing an elected
official or any official holding a high-level decision-making or
sensitive position, increase by 8 levels." Cruzado was convicted
for being on the receiving end of various corrupt pay-offs, and he
argues that this provision only applies when a defendant has made,
rather than received, the payment. Nothing in the quoted language
suggests that this is so. The provision reflects the Sentencing
Commission's determination that the abuse of a position of great
public trust, or the effort to corrupt a person holding such a
position, is more dangerous than the corruption of, for example, a
housing inspector or tax assessor. The eight-level increase is
mandated for a defendant precisely like the defendant here, an
elected official who abuses his position. Extortion "involves"
payments intended to influence the behavior of the extortioner just
as clearly as bribery "involves" payments intended to influence the
bribe-taker.8 See United States v. Bynum, 327 F.3d 986, 993-94
(9th Cir. 2003); United States v. Villafranca, 260 F.3d 374, 381-82
8
Nor is the rule of lenity applicable, as Cruzado claims:
there is nothing at all ambiguous in § 2C1.1.
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(5th Cir. 2001). The district court correctly applied an eight-
level enhancement under § 2C1.1(b)(2)(B).
B. Incorporation of a Referenced Guideline
Section 2S1.1 of the Sentencing Guidelines, which applies
to money laundering, directs the sentencing court to take as the
base offense level for purposes of § 2S1.1 the full calculated
offense level that applies to the offense which produced the
laundered funds. See § 2S1.1(a) ("Base Offense Level" for money
laundering is "[t]he offense level for the underlying offense from
which the laundered funds were derived"). Here, this instruction
meant that, before considering what money-laundering-related
adjustments to apply to Cruzado's sentence, the court first had to
calculate the sentence as it would have applied to the extortion
counts standing alone, making reference to § 2C1.1. It was only
then required to return to § 2S1.1 (and specifically to § 2S1.1(b))
to determine if further adjustments were necessary under that
provision. In this case, having calculated the final offense level
for the extortion offenses under § 2C1.1 and applied it as the base
offense level for money laundering under § 2S1.1, the district
court went on to find that a further two-level enhancement was
warranted under § 2S1.1(b)(2)(B), because Cruzado was convicted of
money laundering under 18 U.S.C. § 1956.
Cruzado contends that, having once turned from § 2S1.1 to
§ 2C1.1 under the direction of § 2S1.1(a), the district court
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should not have turned back to a consideration of the special
offense characteristics under § 2S1.1(b), but this is flatly
incorrect. As is generally the case among the offense guidelines
specified in Chapter Two of the Guidelines Manual, § 2S1.1
contemplates that the adjustments for special offense
characteristics specified in its part (b) will be applied after the
base offense level specified in its part (a) has been calculated,
whether or not that base offense level is calculated by reference
to another provision of the Guidelines.9 The district court
rightly applied the special offense characteristic provisions of §
2S1.1(b) after finishing its § 2C1.1 calculations.
C. Abuse of Trust
The district court applied a two-level abuse-of-trust
enhancement under § 3B1.3. That section calls for such an increase
"[i]f the defendant abused a position of public or private trust .
. . in a manner that significantly facilitated the commission or
9
Section 1B1.5 provides instructions for reading a guideline
that refers to another guideline. That section directs that "[a]n
instruction to use the offense level from another offense guideline
refers to the offense level from the entire offense guideline." §
1B1.5(b)(1). This provision meant here that, where § 2S1.1(a)
incorporated the offense level for extortion as the base offense
level for money laundering, it incorporated the final calculated
offense level for the extortion, which was 20, and not merely the
unadjusted base offense level for extortion, which would have been
10. Cruzado argues that the instruction under § 1B1.5 that §
2S1.1(a) be read to incorporate the "entire offense guideline"
specified at § 2C1.1 precluded making further adjustments under the
remainder of § 2S1.1, but this reading of § 1B1.5 is simply
implausible.
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concealment of the offense." § 3B1.3. It cautions, however, that
"[t]his adjustment may not be employed if an abuse of trust or
skill is included in the base offense level or specific offense
characteristic." Id. This second provision bars application of a
§ 3B1.3 abuse-of-trust enhancement to a case in which any provision
that increases a sentence for an offender who holds high public
office already applies. This is such a case.
The district court here evidently found the § 3B1.3
abuse-of-trust provision applicable because Cruzado had used the
power of his high office in extorting and embezzling funds.10 Abuse
of high office was the same concern, however, that justified the
application of an eight-level enhancement under § 2C1.1(b)(2)(B).
Section 3B1.3 and § 2C1.1(b)(2)(B) both increase a defendant's
sentence for abusing a position of trust, and by the terms of §
3B1.3 cannot both be applied to increase the same defendant's
sentence.11
10
While the court did not explain in detail its reasons for
imposing the § 3B1.1 abuse-of-trust enhancement, it is evident that
it did so because it considered Cruzado's use of his high office to
facilitate his wrongdoing to trigger the guideline provision, and
this is indeed a typical understanding of the provision. See,
e.g., United States v. Sarault, 975 F.2d 17 (1st Cir. 1992) (noting
that former mayor had been determined to have merited, and had not
challenged, § 3B1.3 abuse-of-trust enhancement for role in
corruption scheme).
11
The Sentencing Commission itself appears to recognize that
§ 2C1.1(b)(2)(B) and § 3B1.3 are redundant, for in the application
notes to § 2C1.1, the Commission directs that when sentencing under
the provisions of § 2C1.1, a sentencing court should "not apply §
3B1.3 (Abuse of Position of Trust or Use of Special Skill)." §
-11-
In arguing in favor of the § 3B1.3 enhancement, the
Government relies primarily on an application note to the
laundering guideline, which says that in cases where the offense
level is determined by reference to the guideline for another
offense, "application of any Chapter Three adjustment shall be
determined based on the offense covered by this guideline (i.e.,
the laundering of criminally derived funds) and not on the
underlying offense from which the laundered funds were derived."
§ 2S1.1 cmt. n.2(C). At first blush, one might read this to
suggest that in this case the calculation under the extortion
guideline, including its abuse-of-trust enhancement, should simply
be ignored when it comes to considering the § 3B1.3 adjustment, and
instead one should simply ask the mechanical question whether in
his money laundering activities a defendant abused a position of
trust. In answer to that question, the district court apparently
found that Cruzado's official position facilitated not only his
extortion but also his money laundering. Cruzado attacks the
latter conclusion, but it seems plausible enough to us.
The weakness of the Government's larger argument,
however, is that the § 3B1.3 abuse-of-trust enhancement, as we have
noted, "may not be employed if an abuse of trust . . . is included
in the base offense level or specific offense characteristic." §
2C1.1 cmt. n.3. We do not rely on the application note in reaching
our decision, however, but on the plain language of § 3B1.3.
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3B1.3. While application note 2(C) to the money-laundering
guideline provides that Chapter Three adjustments should be
determined with reference to the money-laundering offense and not
to the underlying offense, the fact remains that the money-
laundering offense level was itself determined pursuant to a cross-
reference that already required an upward adjustment based on abuse
of trust--thereby literally triggering the prohibition ("This
adjustment may not be employed . . .") which we have just quoted.
Although double-counting is not automatically
impermissible under the Guidelines (and is sometimes intentionally
directed), we can see no particular reason why one would want
double-counting in this situation. For these reasons, we conclude
that the district court erred in applying an abuse-of-trust
enhancement under § 3B3.1.
III. Conclusion
Having determined that the court's interpretation of the
Guidelines was legally erroneous, see Robinson, 433 F.3d at 35, we
must again send the case back to the district court. See United
States v. Plaza-Garcia, 914 F.2d 345, 347 (1st Cir. 1990); 18
U.S.C. § 3742(f)(1) (requiring that incorrectly calculated
sentences be remanded). In remanding the case, we do not intend to
intimate that the length of the sentence should necessarily be
changed; what matters is that the premise as to the Guideline range
must be correct.
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The sentence imposed by the district court is vacated and
the case is remanded for resentencing.
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