United States v. Hughes

ON REHEARING
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.
DAVID C. HUGHES,
Defendant-Appellant.  No. 03-4172
THE OFFICE OF THE FEDERAL PUBLIC
DEFENDER,
Amicus Supporting Appellant.

Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Peter J. Messitte, District Judge.
(CR-02-65-PJM)
Argued: October 29, 2004
Decided: March 16, 2005
Before WILKINS, Chief Judge, and TRAXLER and
GREGORY, Circuit Judges.
Affirmed in part, vacated in part, and remanded with instructions by
published opinion. Chief Judge Wilkins wrote the opinion, in which
Judge Traxler and Judge Gregory joined.
2 UNITED STATES v. HUGHES
COUNSEL
ARGUED: William Collins Brennan, Jr., BRENNAN, TRAINOR,
BILLMAN & BENNETT, L.L.P., Upper Marlboro, Maryland, for
Appellant. Stuart A. Berman, Assistant United States Attorney,
OFFICE OF THE UNITED STATES ATTORNEY, Greenbelt, Mary-
land, for Appellee. ON BRIEF: Thomas M. DiBiagio, United States
Attorney, Baltimore, Maryland, for Appellee. James Wyda, Federal
Public Defender, Martin G. Bahl, Staff Attorney, for Amicus Support-
ing Appellant.
OPINION
WILKINS, Chief Judge:
David C. Hughes appeals his convictions for five counts of bank-
ruptcy fraud and perjury and his subsequent sentence. We affirm
Hughes’ convictions. However, in light of United States v. Booker,
125 S. Ct. 738 (2005),1 we find plain error in sentencing, exercise our
discretion to notice the error, vacate the sentence, and remand to the
district court for resentencing consistent with the remedial scheme set
forth in Justice Breyer’s opinion for the Court in Booker. See Booker,
125 S. Ct. at 764-65.2
I.
In an effort to avoid foreclosure on her Virginia townhouse,
Hughes’ wife, Norma Gerstenfeld, filed for Chapter 11 bankruptcy
protection in October 1997. Because Gerstenfeld suffered from a
physical disability, Hughes assisted her in nearly every step of the
bankruptcy proceedings. The actions giving rise to Hughes’ convic-
tions began when Hughes assisted Gerstenfeld in filing schedules
with the bankruptcy court, under penalty of perjury, that understated
1
Consolidated with United States v. Fanfan, No. 04-105 (U.S. Jan. 12,
2005).
2
Subsequent to filing our original opinion in this case, we voted to
grant panel rehearing, and we now file this amended opinion.
UNITED STATES v. HUGHES 3
the value of her personal property by several hundred thousand dol-
lars. Then, without permission from the bankruptcy trustee, Hughes
arranged with auction houses in Maryland and New York for the
appraisal and sale of some of Gerstenfeld’s most valuable assets. On
two subsequent occasions while under oath before the bankruptcy
court, Hughes testified falsely that he had not authorized the sale of
Gerstenfeld’s property by the auction houses.
Hughes was charged with three counts of bankruptcy fraud, see 18
U.S.C.A. § 152 (West 2000), and two counts of perjury, see 18
U.S.C.A. § 1623(a) (West 2000). A jury returned guilty verdicts on
all five counts. At sentencing, the district court grouped the five
counts together pursuant to United States Sentencing Guidelines Man-
ual § 3D1.2(c) (2000) and calculated the sentence as follows:
Base offense level for fraud, § 2F1.1(a): 6
Enhancement for loss greater than $200,000,
§ 2F1.1(b)(1)(I): +8
Enhancement for more than minimal planning,
§ 2F1.1(b)(2)(A): +2
Enhancement for commission of offense during
bankruptcy proceeding, § 2F1.1(b)(4)(B): +2
Enhancement for abuse of position of trust, § 3B1.3: +2
Enhancement for obstruction of justice, § 3C1.1: +2
Final Offense Level: 22
The enhancements to Hughes’ sentence were based upon facts found
by the district court, not by the jury.3 Based on an Offense Level of
22 and a Criminal History Category of I, the court sentenced Hughes
to 46 months in prison. Hughes now appeals.
3
The only exception to this statement is the enhancement for commis-
sion of the offense during a bankruptcy proceeding, see § 2F1.1(b)(4)(B).
Hughes does not challenge this enhancement on appeal.
4 UNITED STATES v. HUGHES
II.
Hughes first argues that the evidence against him was insufficient
to support his convictions on the first three counts in the indictment,
namely for making false statements in bankruptcy, see 18 U.S.C.A.
§ 152(3); concealing assets, see id. § 152(1); and fraudulently trans-
ferring assets, see id. § 152(7). "In evaluating the sufficiency of the
evidence to support a criminal conviction, we must determine—
viewing the evidence and all of the inferences reasonably to be drawn
from it in the light most favorable to the Government—whether a rea-
sonable trier of fact could have found the defendant guilty beyond a
reasonable doubt." United States v. Rahman, 83 F.3d 89, 93 (4th Cir.
1996).
To be convicted under § 152(1), (3), and (7), a defendant must be
proven to have acted "knowingly and fraudulently." 18 U.S.C.A.
§ 152(1), (3), (7). Hughes contends that the Government failed to
prove that he acted fraudulently because it failed to present evidence
that he intended to deceive any creditor, trustee, or bankruptcy judge.
See United States v. Sabbeth, 262 F.3d 207, 217 (2d Cir. 2001) (hold-
ing that to sustain convictions under § 152, government must prove
defendant acted with "intent to deceive"); United States v. Gellene,
182 F.3d 578, 586-87 (7th Cir. 1999) (same). He argues that his dis-
closure of a trust held for Gerstenfeld’s benefit and valued at approxi-
mately $5 million removed any motivation he might have had to
conceal other personal assets since the disclosure enabled the estate
to pay all creditors in full. What Hughes fails to acknowledge is that
the Government presented evidence that Gerstenfeld lacked authority
to liquidate the trust and instead was at the mercy of the trustee, who
had discretion over the trust disbursements. Indeed, it was not clear
at the time of the alleged concealment that the reorganization plan
would provide for full payment to all creditors. A reasonable jury thus
could have concluded that Hughes had ample motive and intent to
deceive the creditors and the bankruptcy court. We therefore conclude
that the evidence against Hughes was sufficient to support the bank-
ruptcy fraud convictions.
UNITED STATES v. HUGHES 5
III.
Next, Hughes argues that the district court violated his Sixth
Amendment rights by imposing a sentence exceeding the maximum
authorized by the jury findings alone. In light of Booker, we conclude
that the district court plainly erred in this regard.4 Accordingly, we
vacate the sentence and remand to the district court for resentencing
consistent with the remedial scheme set forth in Justice Breyer’s opin-
ion for the Court in Booker. See Booker, 125 S. Ct. at 764-65.
A.
For almost two decades, sentences for federal offenses have been
imposed pursuant to the Federal Sentencing Guidelines, a regime
drafted and revised by the United States Sentencing Commission at
the direction of Congress. See generally Sentencing Reform Act of
1984, codified as amended at 18 U.S.C.A. § 3551 et seq. (West 2000
& Supp. 2004) and at 28 U.S.C.A. §§ 991-998 (West 1993 & Supp.
2004). Designed to facilitate uniformity in sentencing by accounting
for the offense of conviction, the "real conduct" underlying the
offense, and the individual characteristics of each defendant, the
guidelines prescribe ranges of sentences that were generally binding
on the district courts. See 18 U.S.C.A. § 3553(b)(1). After a defendant
was convicted, the guidelines required the district court to make a
series of factual findings about the characteristics of the defendant
and of the offense, calculating the final sentence using the facts found
by the jury and the facts found independently by the court prior to
sentencing. Only under very limited circumstances were courts per-
mitted to depart from the ranges prescribed by the guidelines. See id.
(requiring a district court to sentence within the guideline range "un-
less the court finds that there exists an aggravating or mitigating cir-
cumstance of a kind, or to a degree, not adequately taken into
consideration by the Sentencing Commission in formulating the
guidelines"); United States v. Fenner, 147 F.3d 360, 363 (4th Cir.
1998).
4
We of course offer no criticism of the district judge, who followed the
law and procedure in effect at the time of Hughes’ sentencing.
6 UNITED STATES v. HUGHES
In Booker, the Supreme Court ruled that the Sixth Amendment is
violated when a district court, acting pursuant to the Sentencing
Reform Act and the guidelines, imposes a sentence greater than the
maximum authorized by the facts found by the jury alone. See
Booker, 125 S. Ct. at 756. The Court noted that by virtue of
§ 3553(b)(1), "[t]he Guidelines as written . . . are not advisory; they
are mandatory and binding on all judges" and therefore "have the
force and effect of laws." Id. at 750. In light of the binding nature of
the federal regime, the Court found no distinction of constitutional
significance between the guidelines and the state sentencing regime
it evaluated and found wanting in Blakely v. Washington, 124 S. Ct.
2531 (2004). See id. at 751. The Court concluded that enhancing sen-
tences based on facts found by the court alone and not by the jury vio-
lated the Sixth Amendment imperative that "[a]ny fact (other than a
prior conviction) which is necessary to support a sentence exceeding
the maximum authorized by the facts established by a plea of guilty
or a jury verdict must be admitted by the defendant or proved to a jury
beyond a reasonable doubt." Id. at 756 (citing Apprendi v. New Jer-
sey, 530 U.S. 466, 490 (2000)).
Having determined that this feature of the federal sentencing
regime was unconstitutional, the Court next decided upon an appro-
priate remedial scheme that would best effectuate Congress’ intent in
passing the Sentencing Reform Act in light of the Court’s constitu-
tional holding. See id. Rejecting a solution that would have preserved
the mandatory nature of the guidelines while grafting upon them a
requirement that all facts providing the basis for enhancements be
found by a jury, see id. at 757, 759, the Court ruled that Congress
would have preferred a solution that rendered the guidelines advisory
and restored discretion to courts to impose sentences within the range
prescribed by the statutes of conviction, see id. at 767-68, as long as
those sentences are reasonable, see id. at 765-66. The Court therefore
severed and excised the provisions of the Sentencing Reform Act that
mandated sentencing and appellate review in conformance with the
guidelines, see id. at 764 (severing and excising 18 U.S.C.A.
§ 3553(b)(1) and 18 U.S.C.A. § 3742(e)), thereby rendering the
guidelines "effectively advisory," id. at 757.
In the wake of Booker, therefore, the discretion of a sentencing
court is no longer bound by the range prescribed by the guidelines.
UNITED STATES v. HUGHES 7
Nevertheless, a sentencing court is still required to "consult [the]
Guidelines and take them into account when sentencing," id. at 767.
Consistent with the remedial scheme set forth in Booker, a district
court shall first calculate (after making the appropriate findings of
fact) the range prescribed by the guidelines. Then, the court shall con-
sider that range as well as other relevant factors set forth in the guide-
lines and those factors set forth in § 3553(a) before imposing the
sentence. See id. at 764-65. If the court imposes a sentence outside the
guideline range, it should explain its reasons for doing so.5 In light of
the excision of § 3742(e) by the Supreme Court, we will affirm the
sentence imposed as long as it is within the statutorily prescribed
range, see Apprendi, 530 U.S. at 490, and is reasonable, see Booker,
125 S. Ct. at 767.
The Booker Court concluded that this remedial scheme should
apply not only to those defendants, like Booker, whose sentences had
been imposed in violation of the Sixth Amendment, but also to those
defendants, like Fanfan, who had been sentenced under the mandatory
regime without suffering a constitutional violation. See id. at 769
(stating that Fanfan’s sentence did not violate the Sixth Amendment
but noting that "the Government (and the defendant should he so
choose) may seek resentencing under the system set forth in today’s
opinions"); id. ("[W]e must apply today’s holdings—both the Sixth
Amendment holding and our remedial interpretation of the Sentencing
Act—to all cases on direct review.").
B.
Hughes’ sentence exceeded the maximum sentence then authorized
by the facts found by the jury alone, in violation of Booker. However,
Hughes raised this issue for the first time on appeal. Because this
issue was not advanced in the district court, we review the district
5
Even the dissent in Booker, uncontradicted by the opinion of the
Court, acknowledged the "surviving requirement that the court set forth
‘the specific reason for the imposition of a sentence different from that
described’ in the Guidelines." Booker, 125 S. Ct. at 790 (Scalia, J., dis-
senting in part) (quoting 18 U.S.C.A. § 3553(c)(2)). This requirement,
from § 3553(c)(2), was not excised by Booker, and it continues to govern
sentencing courts.
8 UNITED STATES v. HUGHES
court decision for plain error. See Fed. R. Crim. P. 52(b); United
States v. Olano, 507 U.S. 725, 731-32 (1993). Notwithstanding the
heavy burden that a defendant faces when alleging plain error in sen-
tencing, we conclude that the district court plainly erred in imposing
a sentence on Hughes that exceeded the maximum allowed based on
the facts found by the jury alone.
1.
"In reviewing for plain error, our initial inquiry is whether an error
occurred." United States v. Hastings, 134 F.3d 235, 239 (4th Cir.
1998). In Booker, the Court ruled that a sentence exceeding the maxi-
mum allowed based only on the facts found by the jury violates the
Sixth Amendment. See Booker, 125 S. Ct. at 756. Here, under the
mandatory guideline regime in existence at the time of sentencing,
that maximum would have been calculated according to an Offense
Level of 10 (corresponding to a prescribed range of 6 to 12 months’
imprisonment), which is the maximum authorized by the facts found
by the jury.6 The imposition of a 46-month sentence, in part based on
facts found by the judge, therefore constituted error.
2.
"Next, the error must be plain." Hastings, 134 F.3d at 239. For pur-
poses of plain-error review, "‘[p]lain’ is synonymous with ‘clear’ or,
equivalently, ‘obvious.’" Olano, 507 U.S. at 734. An error is plain
"where the law at the time of trial was settled and clearly contrary to
the law at the time of appeal." Johnson v. United States, 520 U.S. 461,
468 (1997); accord United States v. David, 83 F.3d 638, 645 (4th Cir.
1996) (holding that an error is plain when "an objection at trial would
have been indefensible because of existing law, but a supervening
decision prior to appeal reverses that well-settled law"). When
Hughes was sentenced, any claim that imposition of a sentence
greater than the maximum authorized under the guidelines by the
facts found by the jury alone would violate the Sixth Amendment was
foreclosed by circuit precedent. See United States v. Kinter, 235 F.3d
6
Hughes conceded that the jury-found facts authorized the enhance-
ment under U.S.S.G. § 2F1.1(b)(4)(B). That provision requires a two-
level increase or a minimum Offense Level of 10.
UNITED STATES v. HUGHES 9
192, 199-202 (2000). Booker has now abrogated our previously set-
tled law. The error committed by the district court in sentencing
Hughes was therefore plain.
3.
a.
"Third, [Hughes] must establish that the error affected his substan-
tial rights, i.e., that it was prejudicial." Hastings, 134 F.3d at 240. To
demonstrate that the error was prejudicial, Hughes must show that
"the error actually affected the outcome of the proceedings." Id.;
accord United States v. Dominguez Benitez, 124 S. Ct. 2333, 2339
(2004) (explaining that if an error is not structural, "relief . . . is tied
in some way to prejudicial effect, and the standard phrased as ‘error
that affects substantial rights,’ used in Rule 52, has previously been
taken to mean error with a prejudicial effect on the outcome of a judi-
cial proceeding").
The substantial rights inquiry conducted under Rule 52(b) is the
same as that conducted for harmless error under Rule 52(a), with the
important difference that the burden rests on the defendant, rather
than the government, to prove that the error affected substantial
rights. See Olano, 507 U.S. at 734-35; United States v. Williams, 81
F.3d 1321, 1326 (4th Cir. 1996) (noting that on plain error review,
"the question whether a forfeited plain error was actually prejudicial
is essentially the same as the question whether nonforfeited error was
harmless—the difference being only in the party who has the burden
on appeal to show the error’s effect"). Our prejudice inquiry, there-
fore, is governed by the standard set forth by the Supreme Court in
Kotteakos v. United States, 328 U.S. 750 (1946). See Williams, 81
F.3d at 1326.
In Kotteakos, the Supreme Court admonished that in determining
whether an error affected a defendant’s substantial rights, the question
is not whether an error-free proceeding would have produced the
same result: "[I]t is not the appellate court’s function to determine
guilt or innocence. Nor is it to speculate upon probable reconviction
and decide according to how the speculation comes out. Appellate
judges cannot escape such impressions. But they may not make them
10 UNITED STATES v. HUGHES
sole criteria for reversal or affirmance." Kotteakos, 328 U.S. at 763
(citations omitted). Rather, the reviewing court must consider "what
effect the error had or reasonably may be taken to have had upon" the
outcome of the proceedings. Id. at 764. "[I]f one cannot say, with fair
assurance, after pondering all that happened without stripping the
erroneous action from the whole, that the judgment was not substan-
tially swayed by the error, it is impossible to conclude that substantial
rights were not affected." Id. at 765.
The question under the third prong of the plain error analysis is
thus whether Hughes has established that the sentence imposed by the
district court as a result of the Sixth Amendment violation "was lon-
ger than that to which he would otherwise be subject," United States
v. Angle, 254 F.3d 514, 518 (4th Cir. 2001) (en banc). Hughes has
made such a showing. As explained above, the maximum sentence
permitted by the jury verdict was 12 months. Unaware of the stric-
tures imposed by the Sixth Amendment, however, the district court
imposed a sentence of 46 months. We therefore conclude that the
error affected Hughes’ substantial rights. Accord United States v.
Promise, 255 F.3d 150, 160 (4th Cir. 2001) (en banc) (holding that
an Apprendi error resulting in an increased sentence affected the
defendant’s substantial rights). The Sixth and Ninth Circuits have
reached the same conclusion in assessing Sixth Amendment claims
like Hughes’. See United States v. Ameline, 2005 WL 350811, at *4-
*5 (9th Cir. Feb. 10, 2005) (holding that a Sixth Amendment violation
affected the defendant’s substantial rights because the sentence
imposed by the district court "far exceeded the maximum sentence
that the district judge could have imposed under the Guidelines on the
basis of facts admitted by Ameline"); cf. United States v. Oliver, 397
F.3d 369, 379-80 (6th Cir. 2005) (holding that substantial rights were
affected by a Sixth Amendment violation because the defendant "ar-
guably received a sentence that was longer than his sentence would
have been absent a Sixth Amendment violation").
b.
Since our initial decision, several circuits have ruled that an assess-
ment of whether the defendant has been prejudiced by a Sixth
Amendment error must account for the fact that any resentencing will
be conducted pursuant to the remedial scheme announced by Booker,
UNITED STATES v. HUGHES 11
i.e., under an advisory guidelines regime. These courts have held that
if the defendant cannot demonstrate that the district court would have
imposed a different sentence under an advisory guidelines regime,
then the Sixth Amendment error did not affect the defendant’s sub-
stantial rights. See United States v. Mares, 2005 WL 503715, at *9
(5th Cir. Mar. 4, 2005) ("[T]he pertinent question is whether . . . the
sentencing judge—sentencing under an advisory scheme rather than
a mandatory one—would have reached a significantly different
result."); United States v. Paladino, 2005 WL 435430, at *10 (7th Cir.
Feb. 25, 2005) ("[I]f the judge would have imposed the same sentence
even if he had thought the guidelines merely advisory . . . and the sen-
tence would be lawful under the post-Booker regime, there is no prej-
udice to the defendant."); United States v. Rodriguez, 398 F.3d 1291,
1301 (11th Cir. 2005) ("[I]n applying the third prong, we ask whether
there is a reasonable probability of a different result if the guidelines
had been applied in an advisory instead of binding fashion by the sen-
tencing judge in this case."); United States v. Crosby, 397 F.3d 103,
118 (2d Cir. 2005) (holding that a Sixth Amendment error does not
prejudice a defendant if the district court determines on remand "that
under the post-Booker/Fanfan regime the sentence would have been
essentially the same as originally imposed").7 In particular, the Elev-
7
We note that while these courts agree as to the inquiry to be made,
they differ as to the manner in which the question is to be answered. The
Second and Seventh Circuits have held that prejudice can only be prop-
erly assessed by remanding the case to the district court for a determina-
tion of whether the same sentence would have been imposed under an
advisory regime. See Paladino, 2005 WL 435430, at *10 (holding that
"what an appellate court should do in Booker cases in which it is difficult
for us to determine whether the error is prejudicial is, while retaining
jurisdiction of the appeal, order a limited remand to permit the sentenc-
ing judge to determine whether he would (if required to resentence)
reimpose his original sentence"); Crosby, 397 F.3d at 117 (holding that
"the ‘further sentencing proceedings’ generally appropriate for pre-
Booker/Fanfan sentences . . . will be a remand to the district court . . .
for the . . . limited purpose of permitting the sentencing judge to deter-
mine whether to resentence, now fully informed of the new sentencing
regime, and if so, to resentence" (quoting 18 U.S.C.A. § 3742(f) (West
Supp. 2004))); cf. United States v. Davis, 397 F.3d 173, 183 (3d Cir.
2005) (vacating and remanding sentences on the basis that defendants’
sentencing challenges under Booker present issues that "are best deter-
12 UNITED STATES v. HUGHES
enth Circuit claims that we failed to recognize that "[t]he prejudice
inquiry must focus on what has to be changed to remedy the error."
Rodriguez, 398 F.3d at 1303. According to the Eleventh Circuit, our
refusal to incorporate the remedial scheme into our prejudice analysis
is wrong because it disconnects the error to be remedied on
remand from the decision of whether there is to be a
remand. The important function of the third prong of the
plain error test is to prevent a remand for additional pro-
ceedings where the defendant, who failed to make a timely
objection, cannot show that there is a reasonable probability
that a do-over would more likely than not produce a differ-
ent result. That is why the yardstick of prejudice is change
of outcome—a different result if the proceeding were done
over with the error corrected.
Id. at 1302 (emphasis added) (citation omitted).
This language demonstrates a fundamental misunderstanding of
what it means for an error to affect substantial rights. Any inquiry into
whether a Sixth Amendment error affected a defendant’s substantial
rights must take as a given the Sixth Amendment limitation that the
district court improperly exceeded. This much is clear from Kot-
teakos, in which the Court noted that the prejudice "inquiry cannot be
merely whether there was enough to support the result, apart from the
phase affected by the error. It is rather, even so, whether the error
itself had substantial influence." Kotteakos, 328 U.S. at 765.
mined by the District Court in the first instance"). Other circuits have
rejected this approach on the basis that remanding to the district court to
determine prejudice is a misapplication of the plain error rule. See, e.g.,
Rodriguez, 398 F.3d at 1305 ("The determination of plain error is the
duty of courts of appeal, not district courts."); see also Paladino, 2005
WL 435430, at *13 (Ripple, Circuit Judge, dissenting from the denial of
rehearing en banc) ("The panel never tells us what it plans to do with
cases in which retirement, disability or death has made impossible con-
sultation with the district judge who imposed the unconstitutional sen-
tence."). An examination of the approach taken by the Second and
Seventh Circuits is beyond the scope of this appeal.
UNITED STATES v. HUGHES 13
The manner in which the Kotteakos prejudice inquiry is to be per-
formed in cases of Apprendi error on plain error review is illustrated
in our en banc decisions in Promise and Angle. In Promise, we found
that the defendant’s substantial rights were affected by the imposition,
based on judge-found facts, of a sentence ten years longer than the
maximum penalty authorized by the jury verdict. See Promise, 255
F.3d at 160. In Angle, decided the same day as Promise, we con-
cluded that a similar Apprendi error—imposition of a sentence of 292
months’ imprisonment on one of the counts of conviction, for which
the maximum penalty authorized by the jury verdict was 240 months’
imprisonment—did not affect the defendant’s substantial rights. See
Angle, 254 F.3d at 516, 518-19. We reached this conclusion because,
had the district court been aware at sentencing of the relevant Sixth
Amendment limitation, the guidelines "would have obligated [the
court] to achieve the guideline sentence of 292 months imprisonment
by imposing a term of imprisonment of 240 months or less on each
count of conviction and ordering those terms to be served consecu-
tively to achieve the total punishment mandated by the guidelines."
Id. at 518 (citing U.S.S.G. § 5G1.2(d)).
In sum, Promise and Angle indicate that the prejudice inquiry in the
case of a Sixth Amendment violation under Apprendi and its progeny
—including Booker—is whether the district court could have imposed
the sentence it did without exceeding the relevant Sixth Amendment
limitation. If the answer to this inquiry is "yes," as was the case in
Angle, then the defendant has failed to demonstrate an effect on sub-
stantial rights; if the answer is "no," as in Promise, the defendant has
made the required showing.8
This analysis demonstrates why incorporation of the remedial
regime into the prejudice analysis is contrary to Kotteakos and our
established circuit precedent. Considering the Booker remedy in
determining whether a defendant has established an effect on substan-
tial rights from a pre-Booker Sixth Amendment violation would
essentially require us to disregard the Sixth Amendment error alto-
gether. It is one thing to conclude, as we did in Angle, that there is
8
This case does not present, and we do not address, the question of
whether a defendant suffers prejudice because a sentencing court fails to
treat the guidelines as advisory in determining the sentence.
14 UNITED STATES v. HUGHES
no prejudice because the Sixth Amendment limitation did not require
the district court to impose a lower sentence; it is quite another to say
that there is no prejudice because the Sixth Amendment limitation
simply will not apply on remand.
A hypothetical may help to illustrate the flaw in the rule we reject.
Suppose a district court admits evidence of a certain type during trial,
and the defendant is convicted. While the defendant’s appeal is pend-
ing, the Supreme Court holds that the admission of this type of evi-
dence is impermissible. On plain error review, we surely would not
say that the defendant has failed to demonstrate prejudice because he
would likely be convicted on a retrial without the evidence being
admitted. Rather, any conclusion that the defendant had failed to dem-
onstrate prejudice would have to rest on the conclusion that the ver-
dict of guilty actually returned was valid despite—i.e.,
notwithstanding—the wrongful admission of evidence. Accord Sulli-
van v. Louisiana, 508 U.S. 275, 279 (1993) ("The inquiry . . . is not
whether, in a [proceeding] that occurred without the error," the same
result would have been reached, "but whether the [outcome of] this
[proceeding] was surely unattributable to the error."). In short, the
proper focus is on what actually happened as a result of the error, not
what might happen in a subsequent proceeding on remand.
Our conclusion that Hughes’ Sixth Amendment claim must be ana-
lyzed without reference to the remedial scheme is supported by
Booker itself. Had the Court considered the remedial scheme when it
analyzed Booker’s Sixth Amendment claim, it would have been faced
with the novel question, in deciding whether Booker’s substantial
rights were affected, of whether the district court would have imposed
the same sentence under an advisory regime.9 This was a question not
addressed by the Seventh Circuit, which vacated and remanded
Booker’s sentence on the strength of its determination that the sen-
tence imposed on Booker exceeded the maximum penalty authorized
by the jury verdict. See United States v. Booker, 375 F.3d 508, 509,
9
It appears that Booker preserved his constitutional claim in the district
court, for neither the Seventh Circuit nor the Supreme Court applied
plain error review when considering Booker’s appeal. Regardless, except
for who bears the burden, the prejudice inquiry is the same, as we have
already noted.
UNITED STATES v. HUGHES 15
514 (7th Cir. 2004). Nevertheless, the Supreme Court affirmed the
judgment of the Seventh Circuit in its entirety. See Booker, 125 S. Ct.
at 769. That the Supreme Court did not even mention, much less dis-
cuss, such a twist to its previously settled pattern of assessing Sixth
Amendment errors under Apprendi indicates that no such alteration of
the prejudice analysis was contemplated by the Court.10 See United
States v. Milan, 398 F.3d 445, 454 (6th Cir. 2005) (holding that
remand of Booker’s claim for resentencing "amounts—at the very
least—to a holding that sentencing Booker in a manner that violated
the Sixth Amendment affected his substantial rights" and stating that
"[i]t is hard to see how the Eleventh Circuit’s decision in Rodriguez
is consistent with this result").
For these reasons, we decline to consider the Booker remedial
scheme when assessing whether Hughes has demonstrated that he was
prejudiced by the plain violation of his Sixth Amendment rights under
Apprendi.
c.
Before turning to the fourth prong of the plain error analysis, we
pause to address two other matters.
10
We also question whether it is appropriate to consider the remedial
scheme only with respect to the third prong of the plain error analysis.
If one is to conclude that the remedial scheme is to be considered when
analyzing a pre-Booker Sixth Amendment error, it seems more logical to
say that Booker obviated the Sixth Amendment error. Cf. United States
v. Antonakopoulos, 399 F.3d 68, 75-76 (1st Cir. 2005) (holding that a
"Booker error" inheres in treating the guidelines as mandatory and indi-
cating that a Sixth Amendment claim under Apprendi or Blakely is suffi-
cient to preserve a claim of Booker error). It is apparent, however, that
this is not the analysis the Booker Court applied. Compare Booker, 125
S. Ct. at 769 (holding, with respect to Booker, that the district court "im-
posed a sentence higher than the maximum authorized solely by the
jury’s verdict"), with id. (holding that Fanfan’s sentence did not violate
the Sixth Amendment because it was "lower than the sentence authorized
by the Guidelines as written"). Indeed, it would be truly unusual to con-
clude that a defendant’s Sixth Amendment challenge to his guidelines
sentence is defeated by the very decision that establishes the validity of
that challenge.
16 UNITED STATES v. HUGHES
i.
The Eleventh Circuit maintains in Rodriguez that when a defen-
dant, like Hughes, alleges that his Sixth Amendment rights have been
violated by the use of extra-verdict enhancements under a mandatory
guidelines regime, the appellate court should redefine the error as a
failure to treat the guidelines as advisory. See Rodriguez, 398 F.3d at
1303 ("The defendant does not get to define the constitutional
error."). This opinion maintains that redefinition is required because
that is what the Supreme Court did in its ruling in Booker: "The
Supreme Court defined the constitutional error in Booker, and there
the Court said that there would not have been any constitutional error
if the guidelines had been used in an advisory instead of mandatory
fashion." Id. The Rodriguez panel fails to appreciate that after Booker,
there are two potential errors in a sentence imposed pursuant to the
pre-Booker mandatory guidelines regime: a Sixth Amendment error,
which Hughes raised, and an error in failing to treat the guidelines as
advisory, which Hughes did not raise.
The Booker Court recognized that the Sentencing Reform Act and
the guidelines, if applied as written, would in some cases result in vio-
lation of defendants’ Sixth Amendment rights through the mandatory
use of extra-verdict enhancements. The Court remedied this Sixth
Amendment problem by making the Guidelines "effectively advisory"
in all cases, so that a jury verdict of guilt would authorize a sentence
up to the maximum set by the statute of conviction. Booker, 125
S. Ct. at 757. The Court noted that under established law, its remedy
would apply to all cases pending on direct appeal at the time of its
decision. See id. at 769 (citing Griffith v. Kentucky, 479 U.S. 314, 328
(1987)).
The creation of the Booker remedial scheme thus gave rise to a sep-
arate class of error, namely, the error of treating the guidelines as
mandatory at sentencing. Such an error is distinct from the Sixth
Amendment claim that gave rise to the decision in Booker, and it is
non-constitutional in nature. See id. at 769 (holding that Fanfan’s sen-
tence did not violate the Sixth Amendment but noting that either party
"may seek resentencing under the system set forth in today’s opin-
UNITED STATES v. HUGHES 17
ions"). This error may be asserted even by defendants whose sen-
tences do not violate the Sixth Amendment.11
The former mandatory nature of the guidelines was, of course, an
essential factual predicate to the finding of a Sixth Amendment viola-
tion by the Booker Court. It was the mandatory nature of the guide-
lines that rendered them statute-like and thus subjected guidelines
sentences like Hughes’ to the rule of Apprendi. See id. at 750. And,
it was the guidelines in their mandatory form that supplied the maxi-
mum sentence authorized by the jury verdict. See Blakely, 124 S. Ct.
at 2537 (stating that "the ‘statutory maximum’ for Apprendi purposes
is the maximum sentence a judge may impose solely on the basis of
the facts reflected in the jury verdict or admitted by the defendant").
Nevertheless, the constitutional error the Court identified in Booker
was the same error identified in Apprendi and Blakely: the use of
judge-found facts to impose a sentence in excess of the maximum
authorized by the jury verdict alone. See Booker, 125 S. Ct. at 756.
Stated differently, the act of mistakenly treating the guidelines as
mandatory is not part of the Sixth Amendment error before us, despite
the fact that the former mandatory nature of the guidelines set the
stage for the constitutional violation in Booker. That the erroneous
11
The flaw in the analysis of the Eleventh Circuit is encapsulated in
this sentence:
The constitutional error is the use of extra-verdict enhancements
to reach a guidelines result that is binding on the sentencing
judge; the error is the mandatory nature of the guidelines once
the guidelines range has been determined.
Rodriguez, 398 F.3d at 1301. The first clause is entirely correct. The sec-
ond clause, however, is wrong because a mandatory guidelines regime
poses a constitutional problem only insofar as the guideline range
involves extra-verdict enhancements. Just as the use of extra-verdict
enhancements does not violate the Constitution in an advisory sentencing
system, see Booker, 125 S. Ct. at 750, 764, so too the mandatory nature
of the system does not violate the Constitution when the guideline range
does not include any extra-verdict enhancements, see id. at 769 (holding
that Fanfan’s sentence, imposed under the mandatory guidelines regime
without the use of extra-verdict enhancements, did not violate the Sixth
Amendment).
18 UNITED STATES v. HUGHES
treatment of the guidelines as mandatory is not part of the constitu-
tional error can be seen most clearly in a post-Booker context. Sup-
pose a district court, post-Booker, erroneously treats the guidelines as
mandatory when imposing a sentence that rests in part on extra-
verdict enhancements. Such a sentence would certainly be erroneous,
but there would be no Sixth Amendment error because, regardless of
what the district court thought, the guidelines post-Booker are in fact
advisory and the sentence imposed did not exceed the maximum
authorized by the jury verdict (which is, of course, the maximum set
forth in the statute of conviction).
In light of the flaw in the reasoning of Rodriguez, we decline to
alter our previous conclusion that Hughes has demonstrated that his
substantial rights were affected by the Sixth Amendment error com-
mitted by the district court under the pre-Booker guidelines regime.
ii.
The Supreme Court recently discussed the nature of the third-prong
inquiry in Dominguez Benitez, 124 S. Ct. at 2338-40. Some of the lan-
guage in Rodriguez could be taken to mean that the Eleventh Circuit
believes that Dominguez Benitez heightened the standard for demon-
strating an effect on substantial rights on plain error review above the
traditional standard set forth in Kotteakos. See Rodriguez, 398 F.3d
at 1302 (citing Dominguez Benitez for the proposition that a demon-
stration of an effect on substantial rights requires proof that "a do-
over would more likely than not produce a different result"). To the
extent the Rodriguez panel adopted this reading of Dominguez
Benitez, we think it is incorrect.
The defendant, Carlos Dominguez Benitez (Dominguez), pleaded
guilty to a drug trafficking offense. See Dominguez Benitez, 124
S. Ct. at 2336-37. During the plea colloquy, the district court failed
to inform Dominguez, as required by Rule 11 of the Federal Rules of
Criminal Procedure, that he could not withdraw his guilty plea if the
court did not accept the Government’s sentencing recommendation.
See id. at 2337. After the district court imposed a sentence longer than
that recommended by the Government, Dominguez appealed. See id.
at 2337-38. The Ninth Circuit reversed on plain error review, con-
cluding in part that Dominguez’s substantial rights were affected
UNITED STATES v. HUGHES 19
because "the court’s error was not minor or technical and . . . [Domin-
guez] did not understand the rights at issue when he entered his guilty
plea." United States v. Dominguez Benitez, 310 F.3d 1221, 1225 (9th
Cir. 2002).
The Supreme Court granted certiorari to consider a question not
addressed in United States v. Vonn, 535 U.S. 55, 63 (2002), in which
the Court had held that the plain error standard of Rule 52(b) applied
to forfeited Rule 11 challenges: Whether demonstration of an effect
on substantial rights requires a defendant to establish that he would
not have pleaded guilty in the absence of the error. See Dominguez
Benitez, 124 S. Ct. at 2338. The Court answered this question in the
affirmative. See id. at 2339-40. Relying on Kotteakos, the Court
observed that "the standard phrased as ‘error that affects substantial
rights,’ used in Rule 52, has previously been taken to mean error with
a prejudicial effect on the outcome of a judicial proceeding" or a
"‘substantial and injurious effect or influence in determining the . . .
verdict.’" Id. at 2339 (alteration in original) (quoting Kotteakos, 328
U.S. at 776). The Court also noted that "[i]n cases where the burden
of demonstrating prejudice (or materiality) is on the defendant . . . we
have invoked a standard with similarities to the Kotteakos formulation
in requiring the showing of ‘a reasonable probability that, but for [the
error claimed], the result of the proceeding would have been differ-
ent.’" Id. (second brackets in original) (quoting United States v. Bag-
ley, 473 U.S. 667, 682 (1985)(opinion of Blackmun, J.)).12
Having articulated these general standards, the Court turned to the
question of how these rules ought to apply in the Rule 11 context. The
Court stated that the "burden should not be too easy," for at least two
reasons. Id. at 2340. The first of these was "the policies that underpin
Rule 52(b) generally, [which] encourage timely objections and reduce
wasteful reversals by demanding strenuous exertion to get relief for
unpreserved error." Id. Second, and specific to Rule 11 proceedings,
was "the particular importance of the finality of guilty pleas, which
usually rest, after all, on a defendant’s profession of guilt in open
12
In Bagley, the Court adopted the prejudice standard of Strickland v.
Washington, 466 U.S. 668, 694 (1984), which concerned ineffective
assistance of counsel, for cases involving the failure to disclose exculpa-
tory evidence under Brady v. Maryland, 373 U.S. 83, 88 (1963).
20 UNITED STATES v. HUGHES
court, and are indispensable in the operation of the modern criminal
justice system." Id. In light of these policies, and in view of the fact
that the error alleged was not a due process violation, the Court con-
cluded that a defendant challenging a Rule 11 colloquy on plain error
review "must show a reasonable probability that, but for the error, he
would not have entered the plea." Id.
It is thus clear that Dominguez Benitez did nothing to change estab-
lished principles of plain error review. Although the Court did look
to the underlying purpose of Rule 52(b) in articulating the standard,
it appeared to be primarily concerned with the particular nature of a
Rule 11 violation and the need to preserve the finality of guilty pleas.
Indeed, the Court noted that a standard very similar to the one it had
adopted had been employed by some courts on harmless error review
of Rule 11 violations, see id. at 2339 n.8, further indicating that the
nature of the violation, not the forfeiture of the error, controlled the
decision of what showing defendants in Dominguez’s situation would
be required to make. The Court certainly gave no indication either
that it was altering the established rule of Kotteakos or that it was
abandoning its previous holding that determining, on plain error
review, whether substantial rights are affected "normally requires the
same kind of inquiry" as that made on harmless error review, Olano,
507 U.S. at 735. We therefore reject any suggestion that Dominguez
Benitez requires us to depart from our established rule that, in consid-
ering on plain error review whether a defendant has demonstrated an
effect on substantial rights, we simply "apply the obverse of the harm-
less error test as expressed in Kotteakos," under which the pertinent
question is whether the erroneous action "substantially swayed" the
decision maker. Williams, 81 F.3d at 1326 (internal quotation marks
omitted).
4.
Finally, it remains within our discretion to determine whether the
district court error warrants reversal. "Our discretion is appropriately
exercised only when failure to do so would result in a miscarriage of
justice, such as when the defendant is actually innocent or the error
seriously affects the fairness, integrity or public reputation of judicial
proceedings." Hastings, 134 F.3d at 244 (alteration & internal quota-
tion marks omitted). We conclude that exercise of our discretion is
UNITED STATES v. HUGHES 21
warranted here. As a result of a plain and prejudicial Sixth Amend-
ment error, Hughes was sentenced to a term of imprisonment nearly
four times as long as the maximum sentence authorized by the jury
verdict. There can be no doubt that failure to notice such an error
would seriously affect the fairness, integrity, or public reputation of
judicial proceedings. See United States v. Ford, 88 F.3d 1350, 1356
(4th Cir. 1996) (noticing a plain, prejudicial sentencing error that
would have caused the defendant to "serve a term of imprisonment
three years longer than required by the sentencing guidelines"); see
also Oliver, 397 F.3d at 380 (noticing a plain, prejudicial error under
Booker).
The record does not provide any indication of what sentence the
district court would have imposed had it exercised its discretion under
§ 3553(a), treating the guidelines as merely advisory.13 Cf. United
States v. Hammoud, 381 F.3d 316, 354 (4th Cir. 2004) (en banc) (rec-
ommending "that district courts within the Fourth Circuit announce,
at the time of imposing a guidelines sentence, a sentence pursuant to
18 U.S.C.A. § 3553(a), treating the guidelines as advisory only"),
cert. granted, judgment vacated, 125 S. Ct. 1051 (2005). Thus,
although it is certainly possible that Hughes will receive the same
sentence on remand, there is nothing in the record to compel such a
conclusion. This possibility is not enough to dissuade us from notic-
ing the error.14
13
We are not called upon today to decide whether we would notice the
error had the district court indicated that it would have imposed the same
sentence in the exercise of its discretion.
14
It is not enough for us to say that the sentence imposed by the district
court is reasonable irrespective of the error. The determination of reason-
ableness depends not only on an evaluation of the actual sentence
imposed but also the method employed in determining it. Moreover,
declining to notice the error on the basis that the sentence actually
imposed is reasonable would be tantamount to performing the sentencing
function ourselves. This is so because the district court was never called
upon to impose a sentence under an advisory guidelines regime. That the
particular sentence imposed here might be reasonable is not to say that
the district court, now vested with broader sentencing discretion, could
not have imposed a different sentence that might also have been reason-
able. We simply do not know how the district court would have sen-
tenced Hughes had it been operating under the remedial scheme
announced in Booker.
22 UNITED STATES v. HUGHES
IV.
As noted in Part III.A., the first step for sentencing courts is to
determine the range prescribed by the guidelines after making such
findings of fact as are necessary. Here, the district court has already
determined that the guideline range for Hughes’ convictions is 41 to
51 months (based on an Offense Level of 22 and a Criminal History
Category of I). Hughes challenges this calculation on a number of
grounds. Because the district court must consider the correct guideline
range before imposing a sentence on remand, the same calculation
issues already raised by Hughes are likely to arise again. We therefore
take this opportunity to address them.15
A.
Hughes first argues that the district court erred by applying an
eight-level increase to his offense level to account for an intended loss
of $343,696. See U.S.S.G. § 2F1.1(b)(1)(I) (calling for an eight-level
enhancement for losses between $200,000 and $350,000). Hughes
argues that this enhancement was improper because there was no
actual loss to the creditors. He correctly notes that under the reorgani-
zation plan, all of the creditors were to be paid in full. He also asserts
that his intention in transferring Gerstenfeld’s personal property to the
auction houses—without permission of the bankruptcy trustee—"was
to sell it to raise money to pay the creditors sooner—not to harm
them." Br. of Appellant at 26.
We review de novo the district court interpretation of what consti-
tutes "loss" under § 2F1.1 of the guidelines. See United States v. Mil-
ler, 316 F.3d 495, 498 (4th Cir. 2003). Once the correct interpretation
is established, we accept the district court calculation of loss absent
clear error. See id. at 503.
"Loss under § 2F1.1(b)(1) is the actual, probable, or intended loss
to the victims." United States v. Parsons, 109 F.3d 1002, 1004 (4th
15
While we address Hughes’ challenges here, we do not hold that in
every case involving a Booker issue, this court must first address alleged
calculation errors before vacating and remanding for resentencing in
light of Booker.
UNITED STATES v. HUGHES 23
Cir. 1997) (emphasis added) (internal quotation marks & alteration
omitted). The intended loss "will be used if it is greater than the actual
loss," U.S.S.G. § 2F1.1, comment. (n.8), "even if this exceeds the
amount of loss actually possible, or likely to occur, as a result of the
defendant’s conduct," Miller, 316 F.3d at 502. Thus, in determining
the amount of loss in a bankruptcy fraud case, courts may look to "the
amount of loss [the defendant] intended to cause by concealing
assets," rather than "the amount of loss creditors actually suffered."
United States v. Walker, 29 F.3d 908, 913 n.4 (4th Cir. 1994).
The district court observed that at the time of the concealment it
was far from clear that there would be sufficient assets to pay the
creditors in full. This, to the district court, implied that Hughes
"wished to preserve [the concealed] assets and not have them taken
potentially in litigation or, if need be, sold and the assets used for per-
sonal reasons and not made available." J.A. 323-24. On that basis, the
district court calculated the amount of intended loss as the value of
the assets concealed by Hughes—$343,696. We find no error in this
conclusion and affirm the determination of the district court on this
issue.
B.
Next, Hughes asserts that the district court erred in applying a two-
level enhancement for "more than minimal planning." U.S.S.G.
§ 2F1.1(b)(2)(A). "[M]ore than minimal planning" is defined in part
as "more planning than is typical for commission of the offense in a
simple form." § 2F1.1, comment. (n.2) (incorporating by reference
§ 1B1.1, comment. (n.1(f))).
The district court found that Hughes’ conduct in concealing his
wife’s assets met this standard based on the following: "[H]e engaged
an appraiser. He arranged for auction houses. He actually transferred
the assets, some of them at least himself, attended the auctions . . . .
[H]e was clearly involved in trying to get these assets sold and get
proceeds, again, all the time, not disclosing." J.A. 330. Hughes argues
that his conduct involved nothing more than moving the assets from
his home to the auction house and having them appraised: "There was
a simple transfer—there was a simple appraisal," he asserts. Br. of
Appellant at 29.
24 UNITED STATES v. HUGHES
We review the district court conclusion that Hughes’ offense
involved more than minimal planning for clear error. See United
States v. Pearce, 65 F.3d 22, 26 (4th Cir. 1995). Given the multiple
steps taken by Hughes to have Gerstenfeld’s assets transferred to the
auction houses and appraised, we conclude that the district court did
not clearly err in applying the enhancement for more than minimal
planning.
C.
Finally, Hughes argues that the district court erred in applying a
two-level enhancement for obstruction of justice. We find no merit to
any of Hughes’ arguments on this issue.
1.
Hughes first contends that the enhancement to his bankruptcy fraud
offense level constituted impermissible double-counting because his
false statements before the bankruptcy court were part and parcel of
his bankruptcy fraud offenses. As noted above, Hughes was convicted
of three counts of bankruptcy fraud and two counts of perjury. Rather
than imposing separate sentences for the bankruptcy fraud and perjury
offenses, the district court grouped the offenses together, see U.S.S.G.
§ 3D1.2, imposed one sentence for the bankruptcy fraud offenses, and
accounted for the perjury offenses by applying a two-level enhance-
ment to the bankruptcy fraud offense level. No independent sentence
was imposed for the perjury convictions. See id. § 3C1.1, comment.
(n.8).16
16
In relevant part, § 3C1.1, comment. (n.8) provides:
If the defendant is convicted both of an obstruction offense . . .
and an underlying offense (the offense with respect to which the
obstructive conduct occurred), the count for the obstruction
offense will be grouped with the count for the underlying offense
. . . . The offense level for that group of closely related counts
will be the offense level for the underlying offense increased by
the 2-level adjustment specified by this section, or the offense
level for the obstruction offense, whichever is greater.
The district court calculation comported with these instructions.
UNITED STATES v. HUGHES 25
An enhancement for obstruction of justice constitutes impermissi-
ble double-counting only when the conduct giving rise to the
enhancement is identical to the conduct giving rise to the underlying
conviction. Compare United States v. Clark, 316 F.3d 210, 213 (3d
Cir. 2003) (rejecting enhancement when the obstruction—providing
a forged birth certificate to authorities—was identical to the offense
of falsely representing oneself as a United States citizen), and United
States v. Lamere, 980 F.2d 506, 516-17 (8th Cir. 1992) (rejecting
enhancement when the obstruction—concealing counterfeit money
from investigators—was identical to the offense of possessing or con-
cealing counterfeit money), with United States v. Oladipupo, 346 F.3d
384, 385-86 (2d Cir. 2003) (per curiam) (affirming enhancement
when the obstruction—filling out an affidavit containing a false
identity—was different from the offense of illegal reentry after depor-
tation), and United States v. Sabino, 307 F.3d 446, 451 (6th Cir.
2002) (reversing ruling that imposition of enhancement was imper-
missible double-counting when the alleged obstruction—testifying
falsely before a grand jury—did not arise from "precisely the same"
conduct as did the underlying conspiracy offense (emphasis & inter-
nal quotation marks omitted)).17 Here, the conduct giving rise to
Hughes’ bankruptcy fraud convictions included making false state-
ments on the bankruptcy schedules, concealing assets from the bank-
ruptcy trustee, and transferring assets for sale by the auction houses
without the trustee’s permission. In contrast, the conduct giving rise
to the two-level enhancement for obstruction of justice consisted of
Hughes’ perjury before the bankruptcy court. Because the conduct
giving rise to Hughes’ bankruptcy fraud convictions was not identical
to that giving rise to the obstruction enhancement, the district court
did not err in applying the two-level enhancement under § 3C1.1.18
17
See also United States v. Mutuc, 349 F.3d 930, 938 (7th Cir. 2003)
(affirming obstruction enhancement to underlying bankruptcy fraud
offense level). The facts of Mutuc are similar to those here: The defen-
dant committed perjury in the context of a bankruptcy proceeding. He
was convicted of bankruptcy fraud, and the court upheld a two-level
obstruction enhancement to account for the defendant’s perjury. How-
ever, the issue of double-counting was neither raised nor addressed by
the court, so Mutac cannot be regarded as directly on point.
18
We note that our decision may be in tension with the Eighth Circuit
decision in United States v. Lloyd, 947 F.2d 339 (8th Cir. 1991) (per
26 UNITED STATES v. HUGHES
Additionally, we note that our conclusion is consistent with Appli-
cation Note 7 of § 3C1.1, which prohibits an obstruction enhancement
if the defendant’s underlying conviction is itself for an obstruction
offense, unless the conduct further obstructed the investigation, prose-
cution, or sentencing of the obstruction offense significantly. See
U.S.S.G. § 3C1.1, comment. (n.7). Note 7 enumerates those offenses
that are considered obstruction offenses for purposes of this limita-
tion: contempt, obstruction of justice, perjury or subornation of per-
jury, bribery of witness, failure to appear by material witness, failure
to appear by defendant, payment to witness, accessory after the fact,
or misprision of felony. See id. By enumerating a list of obstruction
offenses and prohibiting enhancements to those offenses for obstruc-
tive conduct, the guidelines appear already to account for impermissi-
ble double-counting in this context. That bankruptcy fraud is not
included in this enumerated list further supports our conclusion that
the enhancement to Hughes’ offense level did not reflect impermissi-
ble double-counting. The district court determination on this issue is
therefore affirmed.
2.
Hughes next asserts that his perjurious statements were made in the
bankruptcy court, not in the district court, and therefore fall outside
the scope of the "investigation, prosecution, or sentencing of the
instant offense of conviction." U.S.S.G. § 3C1.1(A) (emphasis added).
The district court rejected this narrow interpretation of § 3C1.1: "The
curiam). There, the defendant was convicted of bankruptcy fraud and
received an obstruction enhancement for concealing assets from the
bankruptcy trustee and for committing perjury during the bankruptcy
proceedings. The court of appeals reversed the enhancement because
"[t]his conduct [was] the basis for the criminal charges against Lloyd."
Lloyd, 947 F.2d at 340. It is unclear from the very brief opinion which
conduct the court was referring to as "[t]his conduct." If the court was
referring to the concealment of assets, Lloyd is in accord with the above-
cited cases, because "concealing assets" was the conduct giving rise to
Lloyd’s bankruptcy fraud conviction. Id. However, to the extent the court
was referring to the perjury, Lloyd contradicts the above cases because
the perjury was not the conduct giving rise to the bankruptcy fraud con-
viction, yet the court still found impermissible double-counting.
UNITED STATES v. HUGHES 27
whole transaction involving the defendant was being investigated by
[the bankruptcy court]," and Hughes’ perjury "was part and parcel of
the whole transaction." J.A. 359-60. The conclusion of the district
court was correct.
"‘[I]nstant offense’ in § 3C1.1 refers to the offense of conviction
including relevant conduct." United States v. Self, 132 F.3d 1039,
1044 (4th Cir. 1997) (emphasis added). Here, the "instant offense[s]"
were the bankruptcy fraud charges. Hughes’ perjurious statements
before the bankruptcy court fall within the definition of "relevant con-
duct" because they were "committed . . . by the defendant . . . during
the commission of the offense of conviction . . . or in the course of
attempting to avoid detection or responsibility for that offense."
U.S.S.G. § 1B1.3(a)(1) (defining relevant conduct). Therefore, under
Self, Hughes’ perjurious statements fall within the scope of "the
instant offense of conviction," and the district court conclusion to that
effect is affirmed. Accord United States v. Bennett, 252 F.3d 559, 566
(2d Cir. 2001) (upholding obstruction enhancement when defendant
obstructed investigation by Securities and Exchange Commission that
occurred before defendant was indicted).
3.
Finally, Hughes argues that his perjurious statements were not
obstructive because he never disputed the existence of the personal
assets; rather, he simply lied about authorizing their sale by the auc-
tion houses. Thus, according to Hughes, his perjurious statements did
not impede the investigation in any way. The district court disagreed,
finding that Hughes’ statements represented "willful obstruction of
justice . . . during the investigation of the instant offense of convic-
tion." J.A. 361.
We review the district court conclusion that Hughes’ statements
were obstructive for clear error. See United States v. Kiulin, 360 F.3d
456, 460 (4th Cir. 2004). Because the bankruptcy court was investi-
gating all aspects of Gerstenfeld’s Chapter 11 petition, including the
location and value of her personal assets and whether they had been
transferred to the auction houses, we find that the conclusion of the
district court that Hughes’ perjurious statements were obstructive is
not clearly erroneous.
28 UNITED STATES v. HUGHES
V.
For the reasons set forth above, we affirm Hughes’ convictions. We
also conclude that the district court did not err in its initial calculation
of the guideline range. However, in light of Booker, we vacate
Hughes’ sentence and remand for resentencing. Because we conclude
that the district court correctly determined the range prescribed by the
guidelines, on remand the court shall consider that range19 as well as
other relevant factors set forth in the guidelines and those factors set
forth in § 3553(a) before imposing the sentence.
AFFIRMED IN PART, VACATED IN PART, AND
REMANDED WITH INSTRUCTIONS
19
Of course, if new circumstances have arisen or events occurred since
Hughes was sentenced that impact the range prescribed by the guide-
lines, the district court should adjust its calculation accordingly.