United States v. Deleon

United States Court of Appeals
For the First Circuit
No. 11-2150
UNITED STATES OF AMERICA,
Appellee,
v.
ALBANIA DELEON,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
Before
Boudin,* Selya, and Stahl,
Circuit Judges.
Jessica Hedges, with whom Hedges & Tumposky, LLP was on brief,
for appellant.
Lori J. Holik, Assistant United States Attorney, with whom
Carmen M. Ortiz, United States Attorney, was on brief, for
appellee.
January 11, 2013
*
Judge Boudin heard oral argument in this matter and
participated in the semble, but he did not participate in the
issuance of the panel's opinion in this case. The remaining two
panelists have issued the opinion pursuant to 28 U.S.C. § 46(d).
STAHL, Circuit Judge. In November 2008, a jury found
defendant-appellant Albania Deleon guilty of having, among other
things, engaged in a scheme to conceal and avoid her company's
employment tax liability. The district court concluded that Deleon
was responsible for just over $1.2 million in tax losses, and she
received a sentence of eighty-seven months. On appeal, she raises
three challenges to her conviction and sentence, arguing that the
court erred by: (1) submitting a set of summary charts to the jury;
(2) adopting the government's loss calculation; and (3) failing to
inquire specifically as to whether she had reviewed the presentence
report (PSR) with her attorney. We affirm.
I. Facts & Background
The full scope of Deleon's criminal scheme was broader
than what we are about to describe; we recite only the facts that
are relevant to this appeal.
Deleon owned and operated two businesses: Environmental
Compliance Training, an asbestos abatement training school, and
Methuen Staffing, Inc., a temporary employment agency that supplied
workers, generally to asbestos abatement businesses, for an hourly
fee. Though Deleon represented to client companies and the
Massachusetts Division of Occupational Safety that Methuen Staffing
would be responsible for all employee tax obligations, she in fact
concealed much of Methuen Staffing's tax liability by maintaining
two separate payrolls. Methuen Staffing paid a minority of its
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employees through a payroll service; for those employees,
compensation was reported and payroll taxes were withheld. We will
refer to this as the "reported payroll." A majority of Methuen
Staffing's employees, however, were on what we will call the
"unreported payroll."1 Methuen Staffing paid these workers
directly with checks and did not withhold payroll taxes from their
wages or report or remit such taxes to the Internal Revenue Service
(IRS). Rather, Deleon told her tax preparers that the unreported
payroll workers were independent contractors for whom she was not
required to remit payroll taxes. Thus, Deleon's tax preparers
recorded the checks to individuals on the unreported payroll as a
business expense and issued an IRS Form 1099 to each of those
workers.2
State and federal investigators, alerted to potential
document fraud and immigration violations at both of Deleon's
companies, raided the companies' offices in November 2006. In
March 2008, Deleon was charged with: one count of conspiracy to
violate multiple federal criminal laws, in violation of 18 U.S.C.
§ 371; five counts of making false statements, in violation of 18
U.S.C. § 1001; sixteen counts of procuring false tax returns, in
1
The testimony at trial indicated that, within Methuen
Staffing, payments made to workers on the unreported payroll were
also referred to as "1099 checks" and "under the table" checks.
2
Methuen Staffing also concealed the unreported payroll from
its workers' compensation insurance provider.
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violation of 26 U.S.C. § 7206(2); and six counts of mail fraud, in
violation of 18 U.S.C. § 1341. After an eleven-day jury trial, she
was convicted on all counts.
II. Analysis
A. The chalks
Deleon's first argument is that the district court
improperly submitted to the jury three summary charts that the
government had used as "chalks," or demonstrative jury aids, at
trial.3 Because her trial counsel explicitly consented to the
submission of the chalks, however, Deleon's claim is waived, and we
need not address its merits.
On November 19, 2008, after the jury had begun its
deliberations, the district court alerted the parties that the jury
had submitted the following question to the court: "Would it be
possible to have the exhibit numbers indicated on the verdict form.
Given the number of counts and amount of evidence, it would be
helpful." The district court noted that the exhibit numbers were
listed on the chalks, which were not in evidence and thus not in
the jury room, and asked the parties for their input.
3
The chalks were labeled "False Statement Counts," "False Tax
Return Counts," and "Mail Fraud Counts." They largely duplicated
charts included in the superseding indictment, which listed each
group of counts against Deleon and relevant information related to
those counts. The chalks did, however, have one additional column
listing the trial evidence admitted in support of each count.
-4-
The government suggested that the court give the chalks
to the jury. Defense counsel responded, "I don't have a problem
with that," but indicated that he wanted to review the copies of
the chalks in his file to confirm that (as the government had
indicated) the chalks did not reflect anything more than the counts
in the indictment and the exhibits that related to each count.4
The record is unclear as to whether defense counsel in fact
examined the chalks, but he did proceed to say, "Your Honor, I'm
fine with that. We were just talking about it." The court then
had a brief discussion with the government about obtaining the
original chalks and bringing them to the courtroom. Finally, the
court had the following exchange with the parties:
The Court: All right. Is there any reason
that the Court just simply can't submit those
chalks in response without calling the jury
back in and doing it on --
Government counsel: I don't think so.
The Court: What I will do then, as soon as you
get the chalks and run them by [defense
counsel] that he agrees –-
Defense counsel: I'm satisfied, your Honor.
The Court: Give me those three chalks. I will
give them to the deputy, who will turn them
over to the marshal, who will give them to the
jury.
4
The "False Tax Return Counts" chalk actually included not
exhibit numbers but calculations that an IRS revenue agent had made
and testified to at trial.
-5-
Deleon's trial counsel thus made three statements
indicating his acquiescence: "I don't have a problem with that"
when the government initially proposed the plan, and then, after
either looking at the chalks or simply conferring with the
government, "Your Honor, I'm fine with that" and "I'm satisfied,
your Honor." That is a quintessential example of "[t]he
intentional relinquishment of a known right," which "results in a
waiver" and makes Deleon's claim unreviewable on appeal. United
States v. Carrasco-De-Jesús, 589 F.3d 22, 26 (1st Cir. 2009).
Though we may, on rare occasions, forgive waivers solely as a
matter of discretion, United States v. Walker, 665 F.3d 212, 227
(1st Cir. 2011), we see no reason to do so here.
B. The loss calculation
Deleon's second broad challenge is to the district
court's calculation of the tax losses for which she should be held
responsible as a result of her fraudulent payroll scheme. We
review for clear error the factual findings upon which a district
court has based its loss calculation. United States v. Stergios,
659 F.3d 127, 135 (1st Cir. 2011). Calculating loss "is more an
art than a science," United States v. Rostoff, 53 F.3d 398, 407
(1st Cir. 1995), and the district court need only make a reasonable
estimate, United States v. Mitrano, 658 F.3d 117, 124 (1st Cir.
2011); U.S.S.G. § 2T1.1, Application Note 1.
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One of the government's witnesses at trial was IRS
Revenue Agent Joseph Guidoboni, who was tasked with calculating the
payroll taxes that Methuen Staffing owed for tax years 2002 through
2005. Agent Guidoboni reviewed Methuen Staffing's quarterly
payroll tax returns, the records of the two payroll services that
Methuen Staffing used, the checks issued to workers on the
unreported payroll, and Methuen Staffing's bank statements. He
determined that Methuen Staffing's gross unreported payroll totaled
$4,560,965.67 but that the company had reported only $1,772,619.07
in gross payroll. Agent Guidoboni then applied calculations
discussed at more length below to determine the taxes due and
owing. He reached a total tax loss figure of $1,074,858.70 for the
years 2002 through 2005. That figure was increased to
$1,200,939.45 after trial, when the government obtained additional
information for tax year 2001.
In advance of her sentencing hearing, Deleon submitted an
expert report that challenged two of the assumptions underlying
Agent Guidoboni's calculations and suggested that he had
overestimated the tax losses. Deleon did not, however, put forward
an alternate calculation. After continuing an initial sentencing
hearing to have the government file a response to Deleon's expert's
criticisms, the district court ultimately adopted the government's
estimate. The court found by a preponderance of the evidence that
"[n]otwithstanding defense counsel's . . . vigorous arguments and
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submissions," Deleon should be held responsible for just over $1.2
million in tax losses. The court emphasized that Application Note
1 to U.S.S.G. § 2T1.1 directs a sentencing court to "make a
reasonable estimate based on the available facts" when the loss
amount is uncertain. With a total offense level of 29 and a
criminal history category of I, Deleon's guideline sentencing range
was 87 to 108 months; the court imposed a sentence of 87 months.
Deleon finds three flaws in the government's loss
calculation and thus alleges that it was clear error for the
district court to adopt it.
First, she challenges the government's assumption that
all individuals who were paid through Methuen Staffing's unreported
payroll should be treated as W-2 employees for the purpose of
calculating tax liability. Some, she claims, may have actually
been properly characterized as 1099 workers, and the IRS should
therefore have located and interviewed a "representative sample" of
Methuen Staffing's unreported payroll workers. But Agent
Guidoboni's assumption that the payments from the unreported
payroll were made to employees and not independent contractors was
supported by evidence at trial indicating that: the decision to put
an individual on the unreported payroll had nothing to do with the
type of work that person performed; workers determined for
themselves how they wanted to be paid; and workers regularly
alternated between the reported and unreported payrolls. Deleon
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has, on the other hand, pointed to no evidence in the record of
properly characterized 1099 employees at Methuen Staffing.
Deleon's sentencing counsel was apparently able to
identify numerous instances in which individuals on the unreported
payroll made relatively small sums and received only one or a few
checks. But Deleon again fails to account for the fact that
workers moved between the reported and unreported payrolls, and
those who received relatively little in unreported wages may well
have received more in reported wages. Absent a competent basis to
conclude that any of Deleon's workers were bona fide independent
contractors, we find no clear error. See Stergios, 659 F.3d at
135.
Second, Deleon takes issue with the government's method
of calculating the income tax withholding losses that resulted from
her misclassification of workers. She claims that the government
failed to account for potential low-income workers who may not have
had any tax liability.
As Agent Guidoboni testified at trial, there are three
components of a payroll tax: the Social Security portion (taxed at
12.4 percent), the Medicare portion (taxed at 2.9 percent) and the
federal income tax withheld, which is based upon an individual
worker's designated allowances, as reported to the employer on IRS
Form W-4. For the unreported payroll workers, of course, there
were no W-4 forms, so Agent Guidoboni had to calculate the federal
-9-
income tax withholdings in some other way. Agent Guidoboni derived
an average rate to apply to the unreported payroll by using Methuen
Staffing's own data from the reported payroll. For each quarterly
reported payroll tax return, Agent Guidoboni divided the federal
income tax withholdings by the total compensation reported and
derived a tax rate that he then applied to the unreported payroll.
His rates, which he described as "conservative," generally ranged
from six to ten percent.5
Agent Guidoboni's technique strikes us as having resulted
in "a reasonable estimate based on the available facts." U.S.S.G.
§ 2T1.1, Application Note 1. Furthermore, as the district court
noted, the debate is largely academic, because even without the
income tax losses, which comprised $423,000 of the total $1.2
million loss calculation, Deleon's offense level and sentencing
range would have been the same, given how the sentencing guideline
grouping principles operate with respect to the multiple offenses
of conviction at issue here. See id. § 3D1.4.
Deleon's final challenge to the loss calculation relates
to the inclusion of data that she claims was unreliable. As part
of his process of determining the payroll taxes due and owing,
Agent Guidoboni reviewed a spreadsheet listing approximately 13,000
5
It is worth mentioning that Note A to U.S.S.G. § 2T1.1(c)
prescribes a tax rate of twenty-eight percent of unreported gross
income in situations in which gross income has been underreported,
unless a more accurate determination of the tax loss can be made.
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handwritten checks drawn on the Methuen Staffing bank account. The
spreadsheet reflected the account number of each check, the check
number, the check amount, the payee, the date of the check, and any
remarks written on the memo line of the check. Agent Guidoboni
testified that he only included in his calculations checks that had
an hourly wage rate and a number of hours worked noted in the check
memo line, except where he had identified another check to the same
worker that included either an hourly rate or hours worked. At
sentencing, Deleon identified at least thirty-three checks without
notations in the memo line that she claimed Agent Guidoboni should
not have included in his calculations.
The government argues, and Deleon does not contest on
appeal, that twenty-nine of those were checks to payees for whom
Agent Guidoboni had identified another check that did have a proper
wage or hour notation on the memo line. That leaves four checks
issued to entities that clearly were not employees. We agree with
Deleon that it was error for the government to include those checks
in its calculation, but the checks totaled $1,807 of the
$4,560,965.67 unreported employee payroll calculation. Deleon has
made no argument that the inclusion of that $1,807 affected her
sentence, and such an insignificant error does not undermine the
entire loss calculation.
The government's loss calculation may not have been
perfect, but it was the kind of rough estimate with which
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sentencing courts routinely deal, see Rostoff, 53 F.3d at 407, and
the court here carefully deliberated before determining that it was
reasonable. We find no clear error in that conclusion,
particularly given that Deleon did not put forward an alternate
calculation. "[A] party dissatisfied with the sentencing court's
quantification of the amount of loss in a particular case must go
a long way to demonstrate that the finding is clearly erroneous."
Id. Deleon has not cleared that high bar.
C. The alleged Rule 32 violation
Deleon's final claim is that we should remand her case
for resentencing because the district court failed to ask, at her
sentencing hearing, whether she and her attorney had read and
discussed the PSR and its addenda. Because Deleon failed to
challenge the district court's compliance with Federal Rule of
Criminal Procedure 32 at the sentencing hearing itself, we review
her claim for plain error. United States v. Espinola, 242 F. App'x
709, 711 (1st Cir. 2007), vacated on other grounds, 552 U.S. 1240(2008); see also United States v. Jeross, 521 F.3d 562, 586 (6th
Cir. 2008); United States v. Stevens, 223 F.3d 239, 242 (3d Cir.
2000); United States v. Lockhart, 58 F.3d 86, 88 (4th Cir. 1995).6
6
Deleon attempts to bypass the plain error standard by
invoking United States v. Mitchell, 243 F.3d 953 (6th Cir. 2001),
which she describes as having adopted a "bright-line policy"
requiring resentencing whenever a Rule 32 violation occurs,
regardless of whether the defendant objected to the error below.
But while the Sixth Circuit did remand for resentencing without a
showing of prejudice in Mitchell, id. at 955, it did not hold that
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Rule 32(i)(1)(A) requires a sentencing court to "verify
that the defendant and the defendant's attorney have read and
discussed the presentence report and any addendum to the report."
Fed. R. Crim. P. 32(i)(1)(A). There is no doubt "that it is the
better practice for trial courts to address the defendant directly
in order to establish that he or she has had the opportunity to
read the [PSR] and to discuss it with his/her counsel. This simple
practice will avoid unnecessary challenges and help ensure fairness
in the sentencing procedure." United States v. Manrique, 959 F.2d
1155, 1157-58 (1st Cir. 1992) (quoting United States v. Mays, 798
F.2d 78, 80 (3d Cir. 1986) (internal quotation marks omitted)).
But we have held that "if it is abundantly clear from the
sentencing hearing that both defendant and his counsel are familiar
with the report, a new sentencing hearing will not be mandated,
even if the court failed to directly inquire whether the defendant
had an opportunity to review the report." Id. at 1157;7 see also
the plain error standard does not apply to a forfeited Rule
32(i)(1)(A) claim. Indeed, the Sixth Circuit has held just the
opposite. See Jeross, 521 F.3d at 586. Furthermore, what occurred
here would not qualify as a Rule 32 violation under Mitchell. See
243 F.3d at 955 ("The district court need not make an affirmative
inquiry, so long as it can somehow determine that defendant and
counsel have read and discussed the report.").
7
Deleon is correct that Manrique addressed a prior iteration
of Rule 32(i)(1)(A), which required the district court to
"determine that the defendant and the defendant's counsel have had
the opportunity to read and discuss the presentence investigation
report." Fed. R. Crim. P. 32(a)(1)(A) (1992). The Rule was
amended in 1994 and now requires the court to "verify" (as opposed
to "determine") that the defendant and her attorney have not only
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Espinola, 242 F. App'x at 711 (holding that, where it is clear from
the record that defense counsel "was thoroughly familiar with the
PSR, 'we will not assume that defense counsel did not discuss so
critically important a document with his client, especially since
appellant claims no such dereliction'" (quoting United States v.
Cruz, 981 F.2d 613, 620 (1st Cir. 1992))).
Here, it was "abundantly clear" from the record that
Deleon had reviewed the PSR and its addenda with her attorney.
Manrique, 959 F.2d at 1157. We note just a few of the salient
facts. Shortly after she was appointed to replace Deleon's trial
counsel, Deleon's sentencing counsel moved for a continuance of the
original sentencing hearing, noting that Deleon's prior counsel had
not reviewed the PSR with her and that sentencing counsel had begun
to do so but needed more time to complete that process. Deleon's
sentencing counsel later submitted seventy-seven objections to the
PSR and filed two sealed submissions with the court. Many of those
objections began with the phrase, "Ms. Deleon advises" and included
information that could only have been obtained from Deleon herself.
One objection, for example, provided explanations for Deleon's
had the opportunity to read and discuss the PSR but have actually
"read and discussed" it. Fed. R. Crim. P. 32(i)(1)(A) (2012). We
see no reason why those changes to the Rule, however, should alter
Manrique's holding that Rule 32 does not require an explicit,
specific inquiry on the record. See United States v. Esparza-
Gonzalez, 268 F.3d 272, 274 (5th Cir. 2001); Mitchell, 243 F.3d at
955; Stevens, 223 F.3d at 241. But see United States v. Rone, 743
F.2d 1169, 1174 (7th Cir. 1984).
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decision to flee the country before her sentencing hearing. Others
offered details to amend or correct the "Personal and Family Data"
section of the PSR, including the correct spelling of Deleon's
grandfather's name, Deleon's height and weight, the fact that a
family parakeet had died while she was incarcerated, and
information about her medical history.
Given the myriad indicators that Deleon reviewed the PSR
with her sentencing counsel, and the fact that she has not made any
claim to the contrary on appeal, we find no plain error and no need
for a new sentencing hearing. See Manrique, 959 F.2d at 1157;
Espinola, 242 F. App'x at 711.
III. Conclusion
For the foregoing reasons, we affirm.
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