United States v. Smith

United States Court of Appeals,
Eleventh Circuit.
No. 95-8120.
UNITED STATES of America, Plaintiff-Appellee,
v.
Harry Leon SMITH, III, Defendant-Appellant.
Dec. 5, 1996.
(As Amended 2/20/97)
Appeal from the United States District Court for the Northern
District of Georgia. (No. 1:94-CR-149), Richard C. Freeman, Judge.
Before BARKETT, Circuit Judge, and DYER and HILL, Senior Circuit
Judges.
BARKETT, Circuit Judge:
Harry Leon Smith appeals his sentence for executing a scheme
and artifice to defraud, and obtaining monies and funds by means of
false and fraudulent pretenses, representations, and promises, in
violation of 18 U.S.C. § 1344. Essentially, Smith was indicted
for, and pled guilty to, running a check kiting scheme, and was
sentenced to 18 months imprisonment and five years supervised
release, and ordered to pay $269,049.40 in restitution.
In this appeal, Smith raises three issues. First, Smith
contends that for purposes of determining the appropriate
sentencing range the amount of loss was $35,500, rather than the
$458,500 recommended in the presentence report. He argues that the
government failed to establish that he had the requisite fraudulent
intent for the charged offense when he deposited nine checks
totaling $458,500 into his account at First Atlanta and drawn on
his Federal Savings Bank ("FSB") account. Instead he argues that
he is only responsible for $35,500 which he withdrew from First
Atlanta after FSB informed him that checks drawn on that account
would not be honored.1 Second, Smith contends that he should have
received an additional one-level reduction for acceptance of
responsibility under § 3E1.1(b) because he (1) timely provided
complete factual information to the government, and (2) timely
notified authorities of his intention to plead guilty. He argues
that the court wrongfully refused to grant the additional one-level
reduction because Smith's counsel objected to the amount of loss
determination contained in the presentence report. Third, Smith
argues that his offense level should not have been increased by two
points for more than minimal participation because his withdrawal
of $35,500 was a spur-of-the-moment impulse.
Under the facts of this case, we find no merit to Smith's
arguments except for his claim that his lawyer's legal arguments
should not preclude him from receiving a reduction for acceptance
of responsibility under § 3E1.1(b) if he timely provided complete
factual information to the government regarding his illegal
actions.
Section 3E1.1 authorizes a two-point reduction in the base
offense level "[i]f the defendant clearly demonstrates acceptance
of responsibility for his offense," see U.S.S.G. § 3E1.1(a), and an
additional one-point reduction if the defendant timely provides
complete factual information to the government concerning his own
involvement in the offense and/or timely notifies authorities of
his intention to plead guilty, see U.S.S.G. § 3E1.1(b). The
1
We find no merit to Smith's argument that for sentencing
purposes the amount of loss should have been further reduced by
the amount the bank recovered from collateral and other assets.
purposes of the acceptance of responsibility reductions permitted
under § 3E1.1(a) and (b) are two-fold: first, timely acceptance of
responsibility for one's own actions indicates a willingness and
capacity for rehabilitation, and second, timely acceptance of
responsibility saves the government the time and expense of going
to trial. See United v. De Leon Ruiz, 47 F.3d 452, 455 (1st
Cir.1995); United States v. Eyler, 67 F.3d 1386, 1390-91 (9th
Cir.1995); United States v. Hammick, 36 F.3d 594, 600 (7th
Cir.1994); United States v. Hernandez, 45 F.3d 437 (9th Cir.1994);
United States v. Sklar, 920 F.2d 107, 115-16 (1st Cir.1990).
Therefore, a defendant generally is not entitled to a reduction if
he puts the government to its burden of proof by denying the
essential factual elements of guilt. See U.S.S.G. § 3E1.1,
comment. (n. 2). However, a defendant who admits factual guilt
need not silently accept any punishment that the government chooses
to mete out, however incommensurate with the underlying conduct.
See United States v. McConaghy, 23 F.3d 351, 353-54 (11th Cir.1994)
(defense counsel must be given a reasonable opportunity to properly
investigate the charges and contest the legal basis for a
conviction or sentence prior to admitting guilt). Otherwise, the
constitutional rights to effective assistance of counsel and due
process are illusory. Thus, although we confer a benefit on those
who timely and completely acknowledge their wrongful acts, a
defendant may not be denied a reduction under § 3E1.1 solely for
exercising the right to challenge the legal propriety of his
punishment under the criminal code and/or sentencing guidelines.
In such a case, i.e., where a defendant admits factual guilt but
challenges a legal conclusion, a court still has discretion to
order or deny a reduction depending on "the offender's recognition
of the wrongdoing of his conduct, his remorse for the harmful
consequences of the conduct, and his willingness to turn away from
that conduct in the future." See U.S. v. Calhoon, 97 F.3d 518, 531
(11th Cir. 1996). However, it is impermissible to consider the
challenge to the legal propriety of a sentence. See U.S.S.G.
§3E1.1 cmt.2 ("[A] defendant may clearly demonstrate an acceptance
of responsibility for his criminal conduct even though he exercises
his constitutional right to a trial. This may occur, for example,
where a defendant goes to trial. This may occur, for example,
where a defendant goes to trial to assert and preserve issues that
do not relate to factual guilt (e.g. to make a constitutional
challenge to a statute or a challenge to the applicability of a
statute to his conduct).") (emphasis added).
In this case, Smith timely confessed his involvement in the
check kiting scheme. He admitted that he deposited nine checks
totaling $458,500 into his account at First Atlanta Bank, which
eventually were returned to First Atlanta as uncollected funds. He
also admitted that he withdrew $35,500 from his account at First
Atlanta after having been told that the checks drawn on his FSB
account would not be honored. In the presentence report the
probation officer recommended a total loss amount of $458,500,
after determining that that figure represented the total amount of
checks written by the defendant in the execution of his scheme to
defraud. The probation officer also initially recommended a
three-level reduction for acceptance of responsibility pursuant to
U.S.S.G. §§ 3E1.1(a) & (b). Thereafter, Smith's attorney objected
to the recommended loss amount, arguing that Smith committed fraud,
an essential element of the offense, only with respect to the
$35,500 that he withdrew after having been informed that the checks
he had deposited earlier would not be honored by FSB. Based upon
counsel's objection, the probation officer rescinded its
recommendation for a three-level acceptance of responsibility
reduction and the sentencing court subsequently granted Smith a
two-level decrease for acceptance of responsibility, rather than a
three-level reduction.
To the extent that the court denied Smith a reduction for
acceptance of responsibility because Smith's counsel objected to
the presentence report on legal grounds, the court erred. If Smith
admitted all the necessary facts of his scheme to the government,
he should not be precluded from having counsel argue the legal
effect of those facts to the sentencing court by risking the
benefits derived by his candid admissions. Because we are unsure
whether he admitted all the necessary facts, we remand to the
district court to determine whether Smith was entitled to an
additional one-level reduction in accordance with this opinion.
REMANDED.