United States v. Robert Welch

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 12a0239p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellee, -
UNITED STATES OF AMERICA,
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No. 10-4025
v.
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Defendant-Appellant. -
ROBERT JAMES WELCH,
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Appeal from the United States District Court
for the Northern District of Ohio at Akron.
No. 09-00322-001—David D. Dowd, Jr., District Judge.
Argued: March 1, 2012
Decided and Filed: August 2, 2012
Before: MERRITT and COOK, Circuit Judges; COX, District Judge.*
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COUNSEL
ARGUED: Barry M. Ward, Akron, Ohio, for Appellant. Gary D. Arbeznik,
ASSISTANT UNITED STATES ATTORNEY’S OFFICE, Cleveland, Ohio, for
Appellee. ON BRIEF: Barry M. Ward, Akron, Ohio, for Appellant. Gary D. Arbeznik,
ASSISTANT UNITED STATES ATTORNEY’S OFFICE, Cleveland, Ohio, for
Appellee.
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OPINION
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MERRITT, Circuit Judge. This is a direct criminal appeal from a guilty plea for
counterfeiting. Defendant raises two sentencing issues on appeal. First, he contends that
the district court violated the Ex Post Facto Clause of the United States Constitution
*
The Honorable Sean F. Cox, United States District Judge for the Eastern District of Michigan,
sitting by designation.
1
No. 10-4025 United States v. Welch Page 2
when it calculated his offense level by relying on an amendment to U.S.S.G. § 2B5.1
that became effective between the time of his illegal conduct and his sentencing date,
thereby impermissibly subjecting him to a harsher sentence than he would have been
subject to at the time of the illegal conduct. Second, defendant contends that the district
court erred by not ordering his federal sentence to run concurrently with his
undischarged Arizona state sentence in contravention of U.S.S.G. § 5G1.3(b). Because
we agree that the district court violated the Ex Post Facto Clause of the Constitution by
relying on an amendment to the Sentencing Guidelines that was not in effect at the time
of Welch’s illegal conduct and that subjected him to a harsher sentence, we remand for
resentencing.
I.
The facts of the counterfeiting are not in dispute. Welch was charged with
counterfeiting after bleaching genuine, small denomination federal reserve notes and
then printing a higher denomination on the bleached, genuine notes. Indictment at 2.
Specifically, the indictment alleges that between February 14, 2009, and June 10, 2009,
Welch and his wife took genuine $5 notes, cooked them in a microwave, scrubbed the
ink off with bleach and used a copier to counterfeit $50 and $100 notes by printing the
higher denominations onto genuine currency paper. Although counterfeit notes were
passed in Ohio, Welch then traveled to Arizona where he was arrested on June 22, 2009.
He was convicted of five counts of forgery in Maricopa County (Arizona) Superior
Court on February 19, 2010, for counterfeiting conduct in that state and sentenced to five
years on each count, to run concurrently with a sentence imposed in the same court for
a separate drug offense. Defendant was arraigned on March 30, 2010, in federal court
on the Ohio counterfeiting charges. He pleaded guilty without a plea agreement to four
violations of counterfeiting, including one count of conspiracy to manufacture and pass
counterfeit obligations or securities with intent to defraud the United States in violation
of 18 U.S.C. § 371 (Count I) and three counts of falsely making, forging, counterfeiting
or altering, as well as passing, obligations or securities of the United States with intent
to defraud in violation of 18 U.S.C. §§ 471 and 472 (Counts 2, 3 and 4). Welch was
No. 10-4025 United States v. Welch Page 3
sentenced on the federal charges in the United States District Court for the Northern
District of Ohio on August 5, 2010, to concurrent 42-month sentences on each of the
four counts, with 24 months to be served concurrently with an Arizona state sentence
and the remaining 18 months to be served consecutively to the Arizona state sentence.
Welch filed a timely notice of appeal.
II.
A. Ex Post Facto Challenge
The first question on appeal is whether the district court erred in using U.S.S.G.
§ 2B5.1 instead of U.S.S.G. § 2B1.1 to calculate Welch’s offense level. Generally,
courts use the Guidelines in effect at the time of sentencing, which in this case (August
2010) would be the 2009 version of the Guidelines Manual. While some confusion
existed as to which Guideline section was to be applied to defendants with counterfeiting
convictions arising from the bleaching of genuine currency to create higher
denomination bills, courts were relying primarily on § 2B1.1 to sentence for conduct that
occurred prior to November 2009. See, e.g., United States v. Taylor, 435 F. App’x 294,
at **2 (5th Cir. 2010); United States v. Dison, 330 F. App’x 56 (5th Cir. 2009); United
States v. Schreckengost, 384 F.3d 922 (7th Cir. 2004); United States v. Inclema, 363 F.3d
1177 (11th Cir. 2004).
A review of the Guideline language before November 1, 2009, demonstrates the
ambiguity. Application Note 3 to § 2B5.1 expressly excludes altered genuine notes,
which is arguably what Welch had, from the purview of § 2B5.1:
3. Inapplicability to Genuine but Fraudulently Altered Instruments.—
“Counterfeit,” as used in this section, means an instrument that purports
to be genuine but is not, because it has been falsely made or
manufactured in its entirety. Offenses involving genuine instruments
that have been altered are covered under § 2B1.1 (Theft, Property
Destruction, and Fraud).
No. 10-4025 United States v. Welch Page 4
U.S.S.G. § 2B5.1 cmt. n.3 (pre-2009) (emphasis added in bold). In addition to stating
that it applies only to instruments “manufactured in [their] entirety,” the note also directs
that “genuine instruments that have been altered” are covered by § 2B1.1.
Welch maintains that because he “altered” federal reserve notes and did not
“manufacture” them in their entirety, § 2B1.1 should apply under the plain language of
Application Note 3 to § 2B5.1. Yet, § 2B1.1 is not clearly applicable either. Section
2B1.1 is entitled “Larceny, Embezzlement, and Other Forms of Theft; Offenses
Involving Stolen Property; Property Damage or Destruction; Fraud and Deceit; Forgery;
Offenses Involving Altered or Counterfeit Instruments Other Than Counterfeit Bearer
Obligations of the United States.” (Emphasis added.) The introductory comments to
§ 2B1.1 state, in relevant part: “These sections address basic forms of property offenses:
theft, embezzlement, fraud, forgery, counterfeiting (other than offenses involving altered
or counterfeit bearer obligations of the United States.)” Introductory Commentary to
§ 2B1.1 (emphasis added). The title of and comments to § 2B1.1 create confusion as to
whether genuine currency altered by bleaching falls within this section despite the
directive of Application Note 3 to § 2B5.1. Despite the ambiguity, most courts
sentencing defendants who bleached genuine currency in the same manner as Welch
before November 1, 2009, used § 2B1.1 to sentence defendants.
In response to the confusion as to whether § 2B1.1 or § 2B5.1 applied to altered
genuine currency, the Sentencing Commission issued Amendment 731, which amended
§ 2B5.1 to expressly include alterations of currency by bleaching within its purview.
Amendment 731, which became effective on November 1, 2009, says, in relevant part:
Section 2B5.1(b)(2)(B) is amended by inserting “(ii) genuine United
States currency paper from which the ink or other distinctive counterfeit
deterrent has been completely or partially removed;” after “papers”; and
by striking “or (ii)” and inserting “Or (iii)”.
In addition, Amendment 731 added the following to the “Definitions” section of
Application Note 1 to § 2B5.1:
1. Definitions.—For purposes of this guideline:
No. 10-4025 United States v. Welch Page 5
“Counterfeit” refers to an instrument that has been falsely made,
manufactured, or altered. For example, an instrument that has been
falsely made or manufactured in its entirety is “counterfeit”, as is a
genuine instrument that has been falsely altered (such as a genuine $5
bill that has been altered to appear to be a genuine $100 bill).
U.S.S.G. § 2B5.1 cmt. n.1 (emphasis added in bold). Welch argues that using the
2009 version of § 2B5.1, which took effect between the time of his offense conduct and
his sentencing, violates the Ex Post Facto Clause of the United States Constitution
because it was not in effect at the time of his offense and it subjects him to a
significantly higher penalty.
We review an Ex Post Facto challenge de novo. United States v. Duane,
533 F.3d 441, 445 (6th Cir. 2008). A district court generally applies the version of the
Sentencing Guidelines in place at the time of sentencing unless applying the current
version would amount to a violation of the Ex Post Facto Clause. U.S.S.G. § 1B1.11(a)
& (b); United States v. Kussmaul, 987 F.2d 345 (6th Cir. 1993). To determine whether
an ex post facto violation exists, we must compare the application of the Guidelines as
they existed on the date the offense was committed with the application of the
Guidelines in place on the day of sentencing. Kussmaul, 987 F.2d at 350. If a revision
of the Guidelines “‘changes the legal consequences of acts completed before its effective
date’ to the detriment of the [defendant], the Guidelines in effect at the time of the
criminal act must be applied.” Id. at 351-52 (quoting Miller v. Florida, 482 U.S. 423(1987)). In Miller, the Supreme Court unanimously concluded that a revision in
Florida’s sentencing guidelines that went into effect between the date of the defendant’s
offense and the date of his conviction violated the Ex Post Facto Clause. The Court’s
conclusion that the new guideline was more onerous than the prior law rested entirely
on an objective appraisal of the impact of the change on the length of the defendant’s
presumptive sentence. 482 U.S. at 431 (“Looking only at the change in primary offense
points, the revised guidelines law clearly disadvantages petitioner and similarly situated
defendants.”).
No. 10-4025 United States v. Welch Page 6
The district court in this case applied U.S.S.G. § 2B5.1(b)(3)1 from the 2009
version of the Guidelines, which calls for a base offense level of 15. Two levels were
added for defendant’s role in the offense for an adjusted level of 17. Defendant then
received a three-level reduction for acceptance of responsibility for a final adjusted level
of 14. Combining an offense level of 14 with a criminal history category of VI, Welch’s
advisory guideline range was 37-46 months. By contrast, had the district court used
§ 2B1.1 (there was no material change relevant to this situation to the language of
§ 2B1.1 between the 2008 and 2009 versions) to calculate the advisory range and applied
the same adjustments, Welch would have received a final adjusted offense level of 9,
which when coupled with the criminal history category VI results in a sentencing range
of 21-27 months. Applying the Supreme Court’s “objective appraisal” of the impact
between using § 2B1.1 or using § 2B5.1 after the Sentencing Commission’s
“clarification” on November 1, 2009, we conclude that using § 2B5.1 with its newly
revised commentary would violate the Ex Post Facto Clause in Welch’s situation.
The government concedes the ambiguity in the pre-2009 versions of § 2B5.1, but
argues that the issuance of Amendment 731 and addition of Application Note 1 simply
“clarify” what § 2B5.1 always intended. It contends that Amendment 731 resulted in no
substantive change to the guideline so there can be no Ex Post Facto violation. We find
1
§ 2B5.1. Offenses Involving Counterfeit Bearer Obligations of the United States (2009
version)
...
(b) Specific Offense Characteristics
...
(2) If the defendant (A) manufactured or produced any counterfeit
obligation or security of the United States, or possessed or had
custody of or control over a counterfeiting device or materials used
for counterfeiting; or (B) controlled or possessed (i) counterfeiting
paper similar to a distinctive paper; (ii) genuine United States
currency paper from which the ink or other distinctive counterfeit
deterrent has been completely or partially removed; or (iii) a feature
or device essentially identical to a distinctive counterfeit deterrent,
increase by 2 levels.
(3) If subsection (b)(2)(A) applies, and the offense level determined
under that subsection is less than level 15, increase to level 15.
...
No. 10-4025 United States v. Welch Page 7
little to support the government’s position, including, most tellingly, the fact that courts
used § 2B1.1 instead of § 2B5.1 to calculate the offense level for defendants convicted
of bleaching genuine reserve notes and printing higher denominations on the genuine
currency as Welch did in this case. In addition, although we do not find this a definitive
indicator, the Sentencing Commission did not label Amendment 731 a “clarifying”
amendment. While Amendment 731 undoubtedly “clarified” the application of § 2B5.1
for future application to defendants who bleach genuine currency, it is acknowledged by
the government that prior to its passage it was unclear if offenses involving bleached
notes that occurred before the effective date of the “clarification” should be sentenced
under § 2B1.1 or § 2B5.1. See Probation Officer’s Response to Defendant’s Objections,
Presentence Investigation Report at 25.
The indictment, in fact, charged Welch with obtaining “printers, scanners,
copiers, surgical gloves, oven cleaner, stain remover, tape, glue, utility blades, and other
equipment to be used in altering genuine Federal Reserve Notes.” Indictment at 2. The
word “altering,” not manufacturing, was used in all four counts of the indictment. Id.
at 4-5. His offense involved genuine reserve notes that had been altered. Welch argues
that bleaching notes is not the same as “manufacturing” or “producing” counterfeit
federal reserve notes. He contends that he “altered” notes rather than “produced” them
and that application note 3 to the 2008 Guidelines for § 2B5.1 excluded “altered” notes
for sentencing under that guideline section. It does not appear that the Sixth Circuit has
addressed this question or that any federal courts have yet addressed the Ex Post Facto
question raised by Amendment 731.
Several courts, confronting the same question before Amendment 731 came to
be, explained that faced with the ambiguity created by the plain language of the
Guidelines in § 2B1.1 and § 2B5.1, the rule of lenity requires that § 2B1.1 apply.
See United States v. Dison, 330 F. App’x 56 (5th Cir. 2009); United States v.
Schreckengost, 384 F.3d 922 (7th Cir. 2004); United States v. Inclema, 363 F.3d 1177(11th Cir. 2004). We agree that the rule of lenity, which requires ambiguous criminal
laws to be interpreted in favor of the defendants subjected to them, applies here. See
No. 10-4025 United States v. Welch Page 8
United States v. Parks, 583 F.3d 923, 928 (6th Cir. 2009) (applying rule of lenity when
faced with ambiguity in Sentencing Guidelines).
The government also argues that any error in using § 2B5.1 instead of § 2B1.1
was harmless because the 18-month term of imprisonment imposed by the district court
to be served consecutively to the Arizona state sentence was less than the 21-27 month
range Welch claims he should have been subject to under § 2B1.1. The government
argues that the record reflects that the district court was going to impose some sort of
consecutive sentence apart from the Arizona sentence and that it is unlikely it would
have gone below 18 months. By using § 2B5.1 instead of §2B1.1, Welch was subjected
to a substantially higher advisory guideline range. We choose not to speculate on what
sentence the district court might impose after recalculating Welch’s sentence under
§ 2B1.1.
B. Failure to Run Entire Federal Sentence Concurrently with State Court Sentence
Welch contends that U.S.S.G. § 5G1.3(b)2 requires the district court to run his
federal sentence entirely concurrent with a sentence Welch was serving for
2
U.S.S.G. § 5G1.3. Imposition of a Sentence on a Defendant Subject to an Undischarged Term
of Imprisonment, states in relevant part:
...
(b) If subsection (a) does not apply, and a term of imprisonment resulted from another
offense that is relevant conduct to the instant offense of conviction under the provisions
of subsections (a)(1), (a)(2), or (a)(3) of §1B1.3 (Relevant Conduct) and that was the
basis for an increase in the offense level for the instant offense under Chapter Two
(Offense Conduct) or Chapter Three (Adjustments), the sentence for the instant offense
shall be imposed as follows:
(1) the court shall adjust the sentence for any period of imprisonment
already served on the undischarged term of imprisonment if the court
determines that such period of imprisonment will not be credited to
the federal sentence by the Bureau of Prisons; and
(2) the sentence for the instant offense shall be imposed to run
concurrently to the remainder of the undischarged term of
imprisonment.
(c) (Policy Statement) In any other case involving an undischarged term of
imprisonment, the sentence for the instant offense may be imposed to run concurrently,
partially concurrently, or consecutively to the prior undischarged term of imprisonment
to achieve a reasonable punishment for the instant offense.
No. 10-4025 United States v. Welch Page 9
counterfeiting in Arizona state prison. Welch did not object to the sentence on this
ground below, so we review for plain error.
Section 5G1.3(b) does not apply to Welch because his state conviction for
passing counterfeit currency in Arizona did not increase the sentence calculated under
the federal guidelines. Welch’s base offense level and two-level enhancement for a
leadership role were arrived at based solely on Welch’s production of counterfeit notes
through bleaching genuine notes and his role in conspiring with his wife to further the
counterfeiting scheme in Ohio. The conduct that formed the basis for his federal
sentence was entirely separate from the passing of the counterfeit notes in Arizona that
formed the basis for the Arizona sentence. The district court properly exercised its
discretion under § 5G1.3(c) to impose a term of imprisonment to achieve a “reasonable
punishment” for the instant offense, be it concurrent, partially concurrent or consecutive.
United States v. Watford, 468 F.3d 891, 915 (6th Cir. 2006).
For the foregoing reasons, we vacate the sentence and remand to the district court
for resentencing.