United States v. Roti, James P.

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-3192
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
JAMES P. ROTI,
Defendant-Appellant.
____________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 04 CR 448—James B. Zagel, Judge.
____________
ARGUED APRIL 9, 2007—DECIDED MAY 3, 2007
____________
Before EASTERBROOK, Chief Judge, and KANNE and
WILLIAMS, Circuit Judges.
EASTERBROOK, Chief Judge. Saddled with a judgment
for more than $400,000 on account of a guarantee of his
small corporation’s debts, James Roti decided to hide his
assets from creditors. He has been convicted of bankruptcy
fraud, see 18 U.S.C. §157, and concealing assets from the
bankruptcy trustee, see 18 U.S.C. §152. His sentence is
21 months’ imprisonment. Roti concedes that he parked
some assets with family members and moved others to
accounts unknown to his creditors, and that he lied to his
principal creditor, to the federal bankruptcy court, and to
the trustee. Roti says that his lawyer Andrew Werth put
2 No. 06-3192
him up to it, and at trial he contended that he should be
acquitted because Werth managed the scheme’s details.
The jury rejected that defense—for it was no defense at all.
That two people cooperate to swindle a third does not
excuse either of the schemers, even if one of them is a
lawyer. Advice of counsel is not a free-standing defense,
though a lawyer’s fully informed opinion that certain
conduct is lawful (followed by conduct strictly in compli-
ance with that opinion) can negate the mental state
required for some crimes, including fraud. See United
States v. Sprong, 287 F.3d 663, 665-66 (7th Cir. 2002); cf.
United States v. Cheek, 3 F.3d 1057, 1061 (7th Cir. 1993).
But Roti does not contend that Werth assured him that
concealing assets and lying to the court would be lawful.
Roti did not call Werth as a witness or introduce any
opinion letter. So it is hard to understand how Werth’s
role, whatever it was, can negate scienter. Roti does not
deny knowing that he was lying under oath, if not at the
outset (he says that he signed blank schedules that Werth
filled in and filed) then in his oral declaration at the
creditors’ meeting under 11 U.S.C. §341 that all of the
schedules were complete and correct.
What Roti did propose to offer is evidence that, after the
fraud was uncovered, he filed suit against Werth. That
suit was taken over by Roti’s trustee in bankruptcy and
settled for $15,000. According to Roti, the settlement
shows Werth’s recognition of his culpability for Roti’s
predicament. The district court held, however, that Fed. R.
Evid. 408 barred the introduction of evidence about the
settlement, and Roti’s principal argument on appeal is
that the decision was mistaken because Rule 408 does
not apply in criminal prosecutions.
United States v. Prewitt, 34 F.3d 436 (7th Cir. 1994),
states that Rule 408 is limited to civil cases. See also
United States v. Ghilarducci, 480 F.3d 542 (7th Cir.
No. 06-3192 3
2007) (decided while this case was on appeal). But Roti’s
lawyer did not call Prewitt to the district judge’s atten-
tion until after trial or make an argument along its lines.
The point therefore has been forfeited, and our review is
limited to a search for plain error—of which there was
none, for multiple reasons.
One reason is that the district judge ruled that he
would exclude the evidence under Fed. R. Evid. 403
independent of Rule 408. That decision was not an abuse
of discretion. It should be evident from what we have said
already that Roti proposed a wild goose chase; the district
judge properly limited the inquiry into this distraction.
Indeed, we doubt that the evidence was relevant, and if
that’s so then it was inadmissible independently as a
result of Rule 402. The problem is not only that Werth’s
culpability would not excuse Roti’s but also that the
settlement of a civil claim does not imply anything helpful
about Roti’s state of mind. There were at least four
possibilities consistent with settlement: (a) Werth failed to
investigate Roti’s finances adequately before filing the
bankruptcy petition and schedules; (b) Werth misled Roti
about what he was going to omit from the bankruptcy
schedules; (c) Werth told Roti to lie in both the schedules
and the creditors’ meeting; (d) Roti lied to Werth as well as
to the court, and Werth did nothing wrong but sought
to avoid the cost and distraction of defending the suit. All
four situations produce a settlement, so the fact that
Werth agreed to pay something would not have helped a
jury distinguish among the possibilities.
More than that, however, is what has happened to Rule
408 since Prewitt. The panel in Prewitt deemed Rule 408
inapplicable to criminal prosecutions because its text did
not specifically mention criminal litigation. Prewitt did not
discuss Fed. R. Evid. 1101(b) or say, after the fashion of
Green v. Bock Laundry Machine Co., 490 U.S. 504 (1989),
that application of Rule 408 to criminal prosecutions
4 No. 06-3192
would be absurd. In 2006 the Supreme Court promulgated
an amendment to Rule 408 demonstrating that at least the
new version (which took effect on December 1, 2006)
applies to criminal cases. The amended rule provides:
Rule 408. Compromise and Offers to Compromise
(a) Prohibited uses.—Evidence of the following is
not admissible on behalf of any party, when offered
to prove liability for, invalidity of, or amount of a
claim that was disputed as to validity or amount,
or to impeach through a prior inconsistent state-
ment or contradiction:
(1) furnishing or offering or promising to fur-
nish—or accepting or offering or promising to
accept—a valuable consideration in compro-
mising or attempting to compromise the claim;
and
(2) conduct or statements made in compromise
negotiations regarding the claim, except when
offered in a criminal case and the negotiations
related to a claim by a public office or agency
in the exercise of regulatory, investigative, or
enforcement authority.
(b) Permitted uses.—This rule does not require
exclusion if the evidence is offered for purposes not
prohibited by subdivision (a). Examples of permis-
sible purposes include proving a witness’s bias or
prejudice; negating a contention of undue delay;
and proving an effort to obstruct a criminal inves-
tigation or prosecution.
Note that the new Rule 408(a)(2), by creating a partial
exception for criminal cases, shows that the rest of the
rule applies to both civil and criminal litigation. The
Committee Note accompanying the amended Rule 408
explains that this was done because the Committee agreed
No. 06-3192 5
with the result of Prewitt, which concluded that admis-
sions of fault made in compromise of a civil securities
enforcement action were admissible against the accused
in a criminal action for mail fraud, but not Prewitt’s view
that Rule 408 is wholly inapplicable to criminal prosecu-
tions.
Our point is not that the amended Rule 408 governs on
this appeal. It took effect after the trial, and the Supreme
Court’s order promulgating the amendment did not
direct retroactive application. Instead we refer to this
development to show that failure to apply Prewitt to Roti’s
trial would not seriously affect the fairness, integrity, or
reputation of judicial proceedings, one ingredient of plain-
error review. See United States v. Olano, 507 U.S. 725,
735-37 (1993). Criminal defendants do not acquire vested
rights to the benefit of appellate opinions whose rationale
has been repudiated. See Lockhart v. Fretwell, 506 U.S.
364 (1993). The 2006 change shows that Prewitt gave an
overbroad reason for what was a sound conclusion on the
case’s facts. There is no reason to deem Prewitt’s rationale,
which is no longer authoritative, such a fundamental
component of criminal procedure that it must be applied
on plain-error review.
Roti’s reply brief presents an argument that was not
made in either the district court or his opening brief: that
after Cunningham v. California, 127 S. Ct. 856 (2007),
district judges no longer may find facts that affect federal
sentences. Although this argument could be dispatched as
forfeited, it has become popular since the Supreme Court’s
decision, and it is best to close the door before other
lawyers waste their time and ours pursuing it.
Cunningham holds that California’s determinate sen-
tencing law violates the sixth amendment, as understood
in Apprendi v. New Jersey, 530 U.S. 466 (2000); Blakely v.
Washington, 542 U.S. 296 (2004); and United States v.
6 No. 06-3192
Booker, 543 U.S. 220 (2005), by granting the judge rather
than the jury the power to find facts that raise the maxi-
mum lawful sentence. Roti contends that Cunningham
applies to the federal Sentencing Guidelines as well as to
California’s system.
Yet Booker itself held that the Guidelines as enacted
violate the sixth amendment. The remedial portion of
Booker solved that constitutional problem by making the
Guidelines advisory. Given that adjustment, findings of
fact under the Guidelines no longer determine statutory
maximum sentences. Cunningham therefore has no effect
on post-Booker federal practice. District judges remain
free, as the remedial portion of Booker instructs, to make
findings of fact that influence sentences, provided that
the sentence is constrained by the maximum set by
statute for each crime. See, e.g., United States v. Hawkins,
480 F.3d 476 (7th Cir. 2007).
One observation before we close. Roti is in prison, but
Andrew Dean Werth remains licensed to practice law.
According to the Attorney Registration and Disciplinary
Commission of Illinois, he is in good standing and no
disciplinary inquiry has ever been conducted. If Roti’s
testimony at trial is correct, however, then Werth planned
and executed a federal crime for which Roti has taken the
fall. If Roti was lying at trial about Werth’s role (as the
district judge concluded when holding that Roti obstructed
justice by his perjury), there remains the possibility that
Werth turned a blind eye to his client’s fraud and facili-
tated misuse of the bankruptcy process. The settlement
may reflect Werth’s recognition that he seriously mis-
handled the situation—though, as we mentioned, it may
show only Werth’s desire to put costly litigation behind
him and get on with life. Neither knaves nor fools should
be representing debtors who need legal assistance. We will
send copies of this opinion (and of the briefs, which provide
No. 06-3192 7
additional factual detail) to the ARDC and the disciplinary
committee of the federal district court so that appro-
priate inquiries can be made into Werth’s fitness. In
asking these bodies to conduct an inquiry, we do not
express any opinion about whether Werth has engaged in
sanctionable conduct.
AFFIRMED
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—5-3-07