United States v. Croce

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
12-22-2006
USA v. Croce
Precedential or Non-Precedential: Non-Precedential
Docket No. 05-1517
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 05-1517, 05-4293, 05-4294 & 05-4405
UNITED STATES OF AMERICA,
Appellant at No. 05-1517
v.
VINCENT J. CROCE
(D.C. Criminal No. 02-cr-0819-1)
UNITED STATES OF AMERICA
v.
BRIAN J. ROSE,
Appellant at No. 05-4293
(D.C. Criminal No. 02-cr-0819-2)
UNITED STATES OF AMERICA
v.
JOSEPH A. QUATTRONE, JR.,
Appellant at No. 05-4294
(D.C. Criminal No. 02-cr-0819-3)
UNITED STATES OF AMERICA,
Appellant at No. 05-4405
v.
BRIAN J. ROSE;
JOSEPH A. QUATTRONE, JR.
(D.C. Criminal Nos. 02-cr-0819-2 & 02-cr-0819-3)
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(Honorable Stewart Dalzell)
Submitted Pursuant to Third Circuit LAR 34.1(a)
November 6, 2006
Before: SCIRICA, Chief Judge, BARRY and ALDISERT, Circuit Judges
(Filed: December 22, 2006)
OPINION OF THE COURT
SCIRICA, Chief Judge.
The government appeals the District Court’s decision to limit its forfeiture order
against Vincent J. Croce to funds he was able to pay at the time of his sentencing. The
government raises the same issue in a cross-appeal against Brian J. Rose and Joseph A.
Quattrone, Jr. Separately, Rose and Quattrone appeal their prison sentences, contending
they are unreasonably long. These cases, which stem from the same set of facts and
2
involve related or identical issues of law, were consolidated for review. We will affirm
the District Court’s sentences of Rose and Quattrone, and we will reverse and remand the
District Court’s forfeiture orders against Croce, Rose and Quattrone.
I.
Croce, Rose and Quattrone were convicted for their roles in a scheme to defraud
insurer Independence Blue Cross. The scheme ran from around 1996 to 2001, and
involved submitting and receiving payments on millions of dollars in fraudulent invoices.
Rose and Quattrone perpetrated the scheme through the operation of two service
companies supposedly providing goods and services to Independence Blue Cross’
corporate headquarters in Philadelphia. The scheme initially involved kickbacks to the
building’s chief engineer, but at some point early in the scheme they invited Croce, then-
director of real estate and building services, to join them. Croce, who had authority to
approve payment of the fraudulent invoices, joined the scheme. From 1996 to 1998, Rose
and Quattrone transferred hundreds of thousands of dollars to Croce in laundered profits.
With the scheme generating significant income for all involved, Croce created a
corporation through which he could receive payments from the service companies run by
Rose and Quattrone. From March 1998 through June 2001, Croce received
approximately $2.3 million as a result of the scheme. From mid-1996 through June 2001,
Rose and Quattrone submitted invoices for goods and services totaling roughly $12.8
million, more than $9 million of which was fraudulent.
3
On December 17, 2002, a federal grand jury returned a sixteen-count indictment
against Croce, Rose, Quattrone and two others charging they fraudulently obtained about
$14 million from Independence Blue Cross. The indictment included charges of mail
fraud, interstate transportation of money taken by fraud, conspiracy to commit money
laundering and money laundering. Rose and Quattrone, who were convicted at trial in
October 2003, were each given prison sentences of ninety-seven months, the low mark in
the range called for under the then-controlling Sentencing Guidelines. 18 U.S.C. § 3553.
Croce, who pleaded guilty in April 2003, was sentenced to fifty-four months in prison.
Following the Supreme Court’s decision in United States v. Booker, 543 U.S. 220 (2005),
which declared the Sentencing Guidelines advisory rather than mandatory, Rose’s and
Quattrone’s sentences were remanded to the District Court for resentencing. The District
Court considered mitigating factors offered by defendants, including harsh prison
conditions, family difficulties resulting from the sentences, the disparity between their
and Croce’s sentences, and alleged good character and rehabilitation. The District Court
imposed essentially the same sentence on Rose and Quattrone, but reduced the prison
terms to ninety months. These new prison sentences were seven months shorter than the
minimum sentence range called for under the Guidelines.
The District Court had also issued preliminary forfeiture orders against the three
defendants. The Judge entered a preliminary forfeiture order against Croce in the amount
of $5,138,935.66 in June 2003. Croce was sentenced on November 5, 2003, but a
4
separate final order of forfeiture was never entered. The Judge ordered forfeiture of
$2,611,149.41 against Rose and Quattrone following their convictions. The District
Court formally finalized those orders at sentencing on January 16, 2004.
Following government motions to enter a final forfeiture order against Croce and
to modify the Rose and Quattrone forfeiture orders to reflect partial satisfaction, the
District Court reconsidered its authority to order forfeiture in amounts the defendants did
not actually possess at the time of sentencing. In September 2004, roughly eight months
after finalizing the forfeiture orders against Rose and Quattrone and ten months after
Croce’s sentencing, the District Court vacated the forfeiture orders against all three
defendants. Eventually, the District Court ruled the government was only entitled to
$2,232,948.15 in forfeiture against each defendant. Rather than issue new forfeiture
orders against the defendants in that amount, the District Court said it would allow the
government to seek forfeiture only against specific property or assets through specific
orders, allowing a total forfeiture collection up to the specified total.
Rose and Quattrone appealed the reasonableness of their new prison sentences,
while the government cross-appealed the District Court’s forfeiture rulings. Also, the
government appealed the District Court’s forfeiture rulings against Croce. As noted,
these cases have been consolidated for our review.
We have jurisdiction to review Rose’s and Quattrone’s direct appeals from the
District Court under 18 U.S.C. § 3742(a) and 28 U.S.C. § 1291. We have jurisdiction to
5
review the government’s direct appeal in Croce’s case and cross-appeal in Rose’s and
Quattrone’s cases under 18 U.S.C. § 3742 and 28 U.S.C. § 1291.
II.
The government contends we have no jurisdiction to review Rose’s and
Quattrone’s sentences for reasonableness. In their reply and supplemental briefs, the
government contends we have no jurisdiction to review a sentence that is within or below
the correctly calculated guideline range, absent a violation of law. The government
contends this type of sentence is not reviewable even after the Supreme Court’s decision
in Booker, which declared the federal sentencing guidelines advisory and directed
appellate courts to review sentences for reasonableness.
We addressed and rejected the government’s arguments in United States v.
Cooper, holding the Sentencing Reform Act “continues to provide for appeals from
sentencing decisions (irrespective of whether the trial judge sentences within or outside
the Guidelines range).” United States v. Cooper, 437 F.3d 324, 327 (3d Cir. 2006)
(internal quotation marks omitted) (quoting Booker, 543 U.S. at 260).1 We have
jurisdiction to review Rose’s and Quattrone’s sentences for reasonableness under 18
U.S.C. § 3742(a)(1), which authorizes the appeal of sentences “imposed in violation of
law.” As we stated in Cooper, we believe an unreasonable sentence is “imposed in
1
Judge Aldisert continues to agree with the government’s contention, as reflected in
his separate opinion in Cooper, 437 F.3d at 333-41, but joins in this opinion because the
teachings of Cooper are binding precedent that he is required to respect.
6
violation of law” under 18 U.S.C. § 3742(a)(1) whether or not the sentence is within or
outside the federal guidelines. Cooper, 437 F.3d at 327–28 (citing United States v.
Frokjer, 415 F.3d 865, 875 n.3 (8th Cir. 2005); United States v. Martinez, 434 F.3d 1318,
1320 (11th Cir. 2006)). Accordingly, we have jurisdiction under § 3742(a)(1) to review
sentences for reasonableness, even when they are shorter than the range provided in the
Sentencing Guidelines, to determine whether they were imposed in violation of law.
Appellants bear the burden of demonstrating that a sentence is unreasonable. We
noted “[t]here are no magic words that a district judge must invoke when sentencing,” but
added that the record should demonstrate the court considered the sentencing factors
provided in 18 U.S.C. § 3553(a), along with any merit-worthy and factually supported
grounds properly raised by the parties. Cooper, 437 F.3d at 332. Part of this review must
include consideration of the advisory sentencing guidelines. Id. at 331.
Here, both Rose and Quattrone concede that the District Court considered all of
the factors under § 3553(a), but contend the Judge improperly gave special weight to the
sentencing guidelines, rather than weighing all of the factors equally. Rose and Quattrone
specifically contend the Judge should have given greater weight to their desire to return
and live with their families, their alleged rehabilitation while in prison, the low likelihood
they would commit crimes in the future, and, of particular concern to them, the disparity
between the ninety-month sentences they received and the fifty-four-month sentence
given to Croce.
7
The record recites the District Court’s thoughtful consideration of the factors
raised by Rose and Quattrone. But the District Court found these factors did not
outweigh the desirability of general deterrence or the “corrosive” crime committed by
Rose and Quattrone. The District Court noted Croce’s shorter sentence was due in
significant part to his acceptance of responsibility early on in the proceedings and his
cooperation with authorities. The District Court, as it is required to do, considered the
Guideline sentencing range of 97 and 121 months, but imposed a sentence lower than the
range, 90 months.
Taken as a whole, the record shows the District Court carefully considered and
reasonably applied the § 3553(a) sentencing factors. Rose and Quattrone have not met
the burden of showing this sentence was unreasonable. We hold the District Court’s
sentences for Rose and Quattrone of ninety months were reasonable under Booker and
consistent with our approach in Cooper.
III.
A.
The government contends the District Court erred in determining it could only
enter forfeiture orders against Croce, Rose and Quattrone for specific money and assets
they were able to pay at the time of sentencing. The government contends this result
would offer a benefit to convicted defendants who succeed in concealing or spending
assets that would otherwise be subject to forfeiture. We agree.
8
Criminal forfeitures are permitted where authorized “in connection with a violation
of an Act of Congress.” 28 U.S.C. § 2461(c).2 Such forfeitures are to be carried out
consistent with the procedures in 21 U.S.C. § 853, which “states that the amount of a
criminal forfeiture is directly related to the amount of the criminal proceeds.” United
States v. Vampire Nation, 451 F.3d 189, 201 (3d Cir. 2006); United States v. Casey, 444
F.3d 1071, 1077 (9th Cir. 2006); United States v. Voigt, 89 F.3d 1050, 1084 (3d Cir.
1996). The statutory scheme does not restrict the District Court from issuing a forfeiture
order in the full amount of the illegal proceeds, even where the full amount is not
presently in the defendant’s possession. Rose and Quattrone 3 admit they are subject to
forfeiture following from their convictions for money laundering.4 But they contend the
2
We note that 28 U.S.C. § 2461(c) was amended on March 9, 2006. It now states: “If
a person is charged in a criminal case with a violation of an Act of Congress for which
the civil or criminal forfeiture of property is authorized, the Government may include
notice of the forfeiture in the indictment or information pursuant to the Federal Rules of
Criminal Procedure. If the defendant is convicted of the offense giving rise to the
forfeiture, the court shall order the forfeiture of the property as part of the sentence in the
criminal case pursuant to to the Federal Rules of Criminal Procedure and section 3554 of
title 18, United States Code. The procedures in section 413 of the Controlled Substances
Act (21 U.S.C. 853) apply to all stages of a criminal forfeiture proceeding, except that
subsection (d) of such section applies only in cases in which the defendant is convicted of
a violation of such Act.”
3
Croce has not filed any response to the government appeal of his case. An amicus
curiae brief was submitted in support of the District Court’s ruling in Croce’s case that is
substantially similar in approach to the position taken by Rose and Quattrone in their
briefs. The government makes the same forfeiture arguments against all three defendants.
4
They acknowledge their money laundering convictions subject them to forfeiture
under 18 U.S.C. § 982(a)(1).
9
District Court was not permitted to enter a nonspecific general forfeiture money judgment
in the amount of the laundered proceeds.
We recently held a district court did have authority to issue an in personam
forfeiture order under § 853, “even where the amount of the judgment exceeds the
defendant’s available assets at the time of conviction.” Vampire Nation, 451 F.3d at 203.
In Vampire Nation, we rejected the contention that a district court lacks authority to issue
a criminal forfeiture judgment for unlawfully obtained funds not in the defendant’s
possession, adding that a contrary position “would permit defendants who unlawfully
obtain proceeds to dissipate those proceeds and avoid liability for their ill-gotten gains.”
Vampire Nation, 451 F.3d at 202.
As in Vampire Nation, the District Court here had the authority to issue a forfeiture
order in the full amount of the illegally-obtained proceeds, as it initially did. Our opinion
in Vampire Nation, which was decided after the District Court’s orders on these
forfeitures, controls this case.5
5
Although the forfeiture order against Croce was preliminary, Fed. R. Crim. P.
32.2(b)(3) provides, in relevant part, “[a]t sentencing–or at any time before sentencing if
the defendant consents–the order of forfeiture becomes final as to the defendant and must
be made a part of the sentence and be included in the judgment.” The government
contends the preliminary order automatically became final at sentencing, despite the
District Court’s failure to formally finalize it.
As we explained in United States v. Bennett, 423 F.3d 271 (3d Cir. 2005), a
District Court’s failure to finalize a preliminary forfeiture order and incorporate it into the
judgment leaves the forfeiture order with no effect. Bennett, 423 F.3d at 276. If the
failure to formalize the forfeiture order at sentencing is clerical, however, it can be
(continued...)
10
B.
Rose and Quattrone separately contend they are not subject to forfeiture judgment
stemming from their convictions for mail fraud because their fraud did not involve a
financial institution.
The Vampire Nation defendant similarly contended that the government could not
seek criminal forfeiture against him for mail fraud because 18 U.S.C. § 982 only
authorizes mail fraud forfeitures involving financial institutions. As we noted in Vampire
Nation, the civil forfeiture statute, 18 U.S.C. § 981, permits forfeiture of proceeds from
the crimes identified at 18 U.S.C. 1956(c)(7). That section includes a list of crimes
detailed at 18 U.S.C. § 1961(1), which includes the crime of mail fraud, whether or not it
involves a financial institution. Vampire Nation, 451 F.3d at 200. In Vampire Nation, we
5
(...continued)
corrected under Rule 36, which reads: “After giving any notice it considers appropriate,
the court may at any time correct a clerical error in a judgment, order, or other part of the
record, to correct an error in the record arising from oversight or omission.” Fed. R.
Crim. P. 36.
In Bennett, we held a court was authorized under Rule 36 to correct an omitted
final order of forfeiture where “(1) the parties stipulated to the forfeiture; (2) a
preliminary order of forfeiture was issued; and (3) the omission of the final order of
forfeiture resulted from an organizational failure, not legal error.” Bennett, 423 F.3d at
281. Here, Croce did not object to the government’s forfeiture motions following his
guilty plea, and the preliminary order was issued. There is nothing in the record to
indicate the failure to issue a final order of forfeiture was anything other than a clerical
error. Therefore, we will treat the preliminary order against Croce as though it had been
formally finalized and included in the judgment.
Because we are remanding for reconsideration of the forfeiture orders, we do not
meet the question of the District Court’s authority to amend the forfeiture order on
September 8, 2004, more than eight months after sentencing.
11
read “the plain language of [18 U.S.C.] § 2461(c), by virtue of the chain of cross-
references ... to explicitly permit criminal forfeiture for general mail fraud, not just for
mail fraud against financial institutions.” Id. at 200 (emphasis in original).
Defendants’ arguments are identical to those presented by the defendant in
Vampire Nation.6 For the same reasons set forth in Vampire Nation, we reject those
arguments here.7
IV.
For the reasons stated above, we will affirm the District Court’s sentences of Rose
and Quattrone, and we will reverse and remand the District Court’s forfeiture orders
against Croce, Rose and Quattrone with instructions to reconsider the forfeiture issues
consistent with this opinion. As noted, we consider the preliminary forfeiture order
entered against Croce to have become a final forfeiture order at Croce’s sentencing.
6
We note the defendant in Vampire Nation specifically relied on the reasoning offered
by the District Court in Croce’s case.
7
We do not address the District Court’s characterization of its inherent power, as it is
unnecessary in this case.
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