BLAIK v. U.S

The district court also sentenced Blaik under the Sentencing Guidelines to twenty-four months, which subsequently was reduced to eighteen months because of a computation mistake, on the failure-to-appear charge. This sentence was to run consecutively to the sentence imposed in the mail fraud case.

See United States v. Stone, 948 F.2d 700, 702 nn. 1-2 (11th Cir. 1991) (giving the legislative history for these statutes).

This motion was filed under the former version of Rule 35(a), which governed offenses committed prior to November 1, 1987, and provided that "[t]he court may correct an illegal sentence at any time." See United States v. Jordan, 915 F.2d 622, 624 (11th Cir. 1990), cert. denied, 499 U.S. 979, 111 S.Ct. 1629, 113 L.Ed.2d 725 (1991).

Following our remand for a finding of excusable neglect, Blaik's attorney gave the following reasons to the district judge in his attempt to persuade the judge not to penalize his client by not reviewing his restitution claim following Hughey because of the attorney's failure to file the appeal from the district judge's denial of the Rule 35 motion within the ten-day period required by Federal Rule of Appellate Procedure 4(b):

Over the past decade undersigned counsel has filed more than seventy cases with the United States Court of Appeals for the Eleventh Circuit. Counsel's general practice is to file a notice of appeal within one or two days of the sentencing hearing in the District Court. Before this case undersigned counsel has never realized that the ten day period enunciated in the Federal Rules of Appellate Procedure is measured differently than the similar ten day periods under the Federal Rules of Criminal Procedure. Because undersigned counsel's usual practice is to file notices of appeal within one or two days after a sentencing hearing or other order, he never before had to confront the fact that ten days in the Court of Appeals means ten calendar days. Ten days in the District Court excludes weekends. Federal Rules of Criminal Procedure 45(a). It is therefore clear that counsel's mistake is the reason why the notice of appeal was filed four days late. The defendant is not at all to blame for this problem.

There is another reason that the notice of appeal was not filed within ten calendar days. After this Court entered its order denying the motion to correct illegal sentence, undersigned counsel had informal consultations with the Assistant United States Attorney previously assigned to this case. Through counsel, the defendant was trying to convince the government that this Court's order was incorrect and that the matter could be resolved by agreement between the parties, after which the defendant would dismiss the notice of appeal. Because the Assistant United States Attorney was out of town for much of that ten day period, and because undersigned counsel incorrectly believed that the ten day period would exclude weekends and holidays, the notice of appeal was not filed within the requisite ten calendar days as required by Rule 4(b) of the Federal Rules of Appellate Procedure. It should be noted that the notice of appeal was filed within the ten day period as it would have been calculated under the Federal Rules of Criminal Procedure.

Defendant submits that there are good grounds as to why the notice of appeal was untimely in this case. Furthermore, counsel's mistake should not prejudice Mr. Blaik's right to have the restitution issue resolved by the Court of Appeals. The underlying substantive issue, whether Hughey v. United States is retroactive, and whether it applies to the types of crimes for which Mr. Blaik was sentenced, are important issues that should be resolved. Furthermore, should the Court determine that there are not grounds for excusable neglect, it appears certain that Mr. Blaik would have the right to file an action under 28 U.S.C. §(s) 2255 to vindicate his rights. Defendant therefore urges this Court to find that there are good grounds as to why the notice of appeal was filed four days late. After such a finding, he then can take the substantive issues to the Court of Appeals.

This court has two standards of review for restitution orders, abuse of discretion and de novo. The history of these review standards is enlightening. In United States v. Lewis, 743 F.2d 859 (11th Cir. 1984), cert. denied, 471 U.S. 1067, 105 S.Ct. 2144, 85 L.Ed.2d 500 (1985), "review[ing] the district court's order granting the bank restitution," id. at 860, and reversing that restitution order, our court stated: "Lewis correctly argues and the government concedes that the district court abused its discretion in ordering restitution," id. at 862 (emphasis added). In United States v. Husky, 924 F.2d 223 (11th Cir. 1991), this court reiterated: "Thus, the issue is whether the district court abused its discretion in ordering that [restitution] relief." Id. at 225 (emphasis added). Husky has been cited for the abuse-of-discretion review standard for restitution orders by numerous subsequent cases. See, e.g. United States v. Twitty, 107 F.3d 1482, 1493 (11th Cir. 1997); United States v. Remillong, 55 F.3d 572, 574 (11th Cir. 1995) (per curiam); United States v. Apex Roofing of Tallahassee, Inc., 49 F.3d 1509, 1512 (11th Cir. 1995) (per curiam); see also United States v. Fuentes, 107 F.3d 1515, 1529 (11th Cir. 1997) (citing Remillong for the abuse-of-discretion review standard for restitution orders).
Although Lewis, decided on October 9, 1984, and Husky, decided on February 21, 1991, had established the abuse-of-discretion review standard for restitution orders in this circuit, our court in United States v. Stone, 948 F.2d 700 (11th Cir. 1991), decided on December 12, 1991, purported to adopt the Ninth Circuit's de novo review standard for restitution orders in our circuit: "We review the legality of a criminal sentence, including an order of restitution, de novo. United States v. Barany, 884 F.2d 1255, 1259 (9th Cir. 1989), cert. denied, 493 U.S. 1034, 110 S.Ct. 755, 107 L.Ed.2d 771 (1990)." Id. at 702. In United States v. Cobbs, 967 F.2d 1555 (11th Cir. 1992) (per curiam), the panel used the de novo review standard for restitution orders engrafted by Stone, id. at 1556, and some subsequent cases in our circuit have cited Cobbs for the de novo review standard for restitution orders, see, e.g., United States v. Stinson, 97 F.3d 466, 468 (11th Cir. 1996) (per curiam), cert. denied, ___ U.S. ___, 117 S.Ct. 1007, 136 L.Ed.2d 885 (1997); United States v. Lombardo, 35 F.3d 526, 527 (11th Cir. 1994) (per curiam). This Stone/Cobbs line of cases, however, diverges from the established abuse-of-discretion review standard for restitution orders that we use in this opinion and that other recent cases cited above also have used. Our court needs to address this situation because this circuit currently appears to have two viable review standards for restitution orders. Given the history of these two review standards, however, we are confident that abuse of discretion is the proper review standard for restitution orders.

We have recognized

that a convicted and sentenced defendant who wishes to challenge his sentencing has several options: he may take direct appeal, file a Rule 35 motion to correct or reduce sentence, or file a section 2255 motion to vacate sentence. These courses of action are not exclusive one of the other; if he acts in time, a defendant may, for example, file a Rule 35 motion and then file a direct appeal. [Petitioner] availed himself of all three procedures, filing a Rule 35 motion, taking direct appeal, and then bringing the present section 2255 petition.

In our judgment, however, there is a difference between a collateral attack on a particular sentence under Fed.R.Crim.P. 35 or 28 U.S.C.A. Section(s) 2255, and a direct appeal from multiple count convictions. With a collateral attack, only a specific sentence on a specific count is before the district court. The narrow scope of review on a collateral attack is almost jurisdictional in nature. The court has power only over what is brought before it.

We need not determine the retroactive application of Hughey to decide this case because restitution restricted to the offense of conviction was the law in this circuit under Barnette when Blaik was sentenced. See Hughey, 495 U.S. at 415 n. 2, 110 S.Ct. at 1982 n. 2 (citing and quoting Barnette with approval as to its restriction of restitution to losses from offenses of conviction). Nevertheless, Stone, which was remanded by the Supreme Court for this court to revisit the restitution order following Hughey, suggests that Hughey is to be applied retroactively to the limited class of cases where plea agreements were entered into prior to this ruling by the Court and before Congress enacted 18 U.S.C. §(s) 3663(a)(3), effective November 29, 1990. See Stone, 948 F.2d at 701. We further agree with the Sixth Circuit that Teague v. Lane, 489 U.S. 288, 109 S.Ct. 1060, 103 L.Ed.2d 334 (1989), "does not bar the retroactive application of Hughey because, unlike Teague, Hughey did not announce a new constitutional rule but merely interpreted a statute, and, again unlike Teague, Hughey did not involve an attack on a conviction but only on a sentence." Guardino, 972 F.2d at 688 n. 7.

We do not address restitution in this case beyond the crimes to which Blaik pled guilty. While other circuits have honored plea agreements entered into before Hughey when the plea agreements did provide for restitution in excess of the crimes of conviction on the basis of the plea bargain, see United States v. Rice, 954 F.2d 40, 43-44 (2d Cir. 1992); United States v. Marsh, 932 F.2d 710, 711-13 (8th Cir. 1991) (plurality opinion), this court has rejected that rationale, Young, 953 F.2d at 1290 n. 2. Accord Guardino, 972 F.2d at 687-88; United States v. Braslawsky, 951 F.2d 149, 151-52 (7th Cir. 1991); Snider, 957 F.2d at 705-07; United States v. Cockerham, 919 F.2d 286, 288 n. 2 (5th Cir. 1990). Although we suggested in dicta in Stone, where restitution was not part of the plea agreement, that a defendant could agree to pay restitution in a plea agreement to all victims in the indictment while pleading guilty only to indictment counts that did not involve all the victims, as the Eighth Circuit upheld in Marsh, we rejected this view when the issue was presented directly in Young, which specifically held that restitution in a plea agreement is limited to the crimes of conviction under Hughey. Compare Young, 953 F.2d at 1290 n. 2 with Stone, 948 F.2d at 704 n. 5.

In his concurrence, Judge Godbold questions whether a federal convict on parole may challenge the restitution portion of his sentence in a Section(s) 2255 motion. Supporting authority exists for his position in other circuits. See Smullen v. United States, 94 F.3d 20, 25-26 (1st Cir. 1996); United States v. Watroba, 56 F.3d 28, 29 (6th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 269, 133 L.Ed.2d 191 (1995); United States v. Segler, 37 F.3d 1131, 1136-37 (5th Cir. 1994); accord United States v. Gaudet, 81 F.3d 585, 592 (5th Cir. 1996). These cases stand for the proposition that a sentenced federal convict must be serving the custodial portion of his sentence to obtain relief under Section(s) 2255 and that solely a challenge to the restitution portion of a sentence after the custodial term has expired is insufficient to satisfy the confinement on liberty required for a Section(s) 2255 motion. In Smullen, the Court's decision in Hughey rendered the restitution, ordered for the entire financial loss for false statements submitted to the Department of Labor over the eight-year duration of Smullen's fraudulent scheme rather than the three years represented in his counts of conviction, to be unlawful. The First Circuit recognized that the attorney's failure to have addressed this issue with the sentencing court might have been ineffective assistance of counsel. See Smullen, 94 F.3d at 24, 25 ("If Smullen's restitution obligation exceeds the maximum amount which the law permits, there may be a reasonable probability that counsel's failure to point this out contributed to the unfavorable outcome. . . . As noted, this [difference in restitution ordered and counts of conviction] might be attributed to the ineffective assistance of counsel where, as here, counsel not only did not point out the relevant law to the district judge, but apparently agreed with the prosecution's erroneous interpretation."). Nevertheless, the First Circuit determined that it was "powerless" to grant Smullen relief under a literal reading of 2255 and its precedent, United States v. Michaud, 901 F.2d 5 (1st Cir. 1990), which held: "`A monetary fine is not a sufficient restraint on liberty to meet the "in custody" requirement for Section(s) 2255 purposes[;][n]or does potential future incarceration for failure to pay such a fine provide the requisite subject matter jurisdiction.'" Smullen, 94 F.3d at 25 (quoting Michaud, 901 F.2d at 7) (alteration in original). Watroba and Segler with the same literal reading of Section(s) 2255 hold similarly and are cited with approval in Smullen. Id.
Not only are these cases nonbinding authority, but also they are in contravention with Supreme Court and our circuit law. The Court's "interpretation of the `in custody' language has not required that a prisoner be physically confined in order to challenge his sentence on habeas corpus." Maleng v. Cook, 490 U.S. 488, 491, 109 S.Ct. 1923, 1925, 104 L.Ed.2d 540 (1989) (per curiam). A prisoner placed on parole is "still `in custody' under his unexpired sentence" because the "petitioner's release from physical confinement under the sentence in question was not unconditional; instead, it was explicitly conditioned on his reporting regularly to his parole officer, remaining in a particular community, residence, and job, and refraining from certain activities." Id. (citing Jones v. Cunningham, 371 U.S. 236, 83 S.Ct. 373, 9 L.Ed.2d 285 (1963)); see Birdsell v. Alabama, 834 F.2d 920, 921 (11th Cir. 1987) (per curiam) ("The `custody' requirement has also been satisfied by a petitioner on parole, see, e.g., Jones v. Cunningham, 371 U.S. 236, 83 S.Ct. 373, 9 L.Ed.2d 285 (1963); released on personal recognizance, Hensley v. Municipal Court, 411 U.S. 345, 93 S.Ct. 1571, 36 L.Ed.2d 294 (1973); or challenging a future, consecutive sentence, Peyton v. Rowe, 391 U.S. 54, 88 S.Ct. 1549, 20 L.Ed.2d 426 (1968)."); cf. Battle v. Thomas, 923 F.2d 165, 166 (11th Cir. 1991) ("The Supreme Court in Maleng excluded from the definition of `in custody' instances in which a petitioner had fully served a former sentence and only suffered from certain collateral consequences of the conviction, such as the inability to hold public office or the possibility that the former sentence would be used to enhance a future sentence"). The Court does require that the broadened definition of custody be satisfied "at the time the [habeas] petition was filed." Maleng, 490 U.S. at 492, 109 S.Ct. at 1926; see Addison v. United States, 589 F.2d 252, 252, 253 (5th Cir. 1979) (per curiam) (holding that Section(s) 2255 petition filed "one day before he was released from parole" correctly was entertained by the district court because petitioner was "`in custody'" when he filed the petition). Furthermore, we specifically have recognized that restitution may be raised in a Section(s) 2255 motion. See United States v. McCarty, 99 F.3d 383, 386-87 (11th Cir. 1996) (per curiam) (citing United States v. Stumpf, 900 F.2d 842, 844-45 (5th Cir. 1990)).
On August 8, 1988, Blaik was sentenced to consecutive five-year terms in custody on each of the two counts to which he pled guilty, and he was sentenced to pay $51,627.88 in restitution, which was a "discrete part of his sentence." United States v. Gifford, 90 F.3d 160, 162 (6th Cir. 1996). At the time that he filed his Section(s) 2255 petition on February 2, 1994, Blaik was and currently is on parole for the remainder of his ten-year custodial sentence. Thus, the custodial requirement was satisfied under Section(s) 2255. Moreover, Hughey was decided after Blaik was sentenced, which precluded this issue on direct appeal, and his attorney failed to perfect a timely appeal from the denial of his Rule 35 motion, which raised the invalidity of Blaik's restitution because of Hughey and resulted in this ineffective-assistance-of-counsel issue in his Section(s) 2255 motion. Because of his counsel's procedural default, Blaik's Section(s) 2255 motion is the first opportunity for this court to address the merits of his contention that his restitution is unlawful under Hughey in the context of his ineffective-assistance-of-counsel claim. Additionally, Blaik's counsel's failure to adhere to a procedural time limit for filing the Rule 35 motion fell below an objective standard of reasonable performance because proper presentation of the Hughey claim should have reduced Blaik's restitution to the counts of conviction thereby changing the result of his sentence, which meets the two-part test for ineffective assistance of counsel under Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674 (1984).

Our examination of the indictment in this case reveals an apparent, albeit unwitting, misrepresentation by the government upon which the district court relied. Blaik's indictment is organized in paragraphs numbered I-V. Under Paragraph V, the thirty victims of Blaik's fraudulent scheme are listed, and each act of mail fraud, or the mailing of marketing correspondence to each victim, is designated as a separate "count." Additionally, the indictment is entitled, "COUNTS ONE THROUGH THIRTY." Original R1-1 (emphasis added). Thus, Counts 1 and 2 of the indictment are two instances of mail fraud that occurred on September 30, 1982, and December 12, 1982, respectively.
In contrast, Paragraphs I-IV provide background information regarding Blaik's fraudulent scheme. Paragraph II gives the complete duration of his mail fraud from September 30, 1982, the mail fraud act in Count 1, until February 4, 1985, the mail fraud act in Count 30. It appears that it was this Paragraph II, rather than Count 2, that the government relied upon in representing to the district court that the entire mail fraud scheme was charged in the counts to which Blaik pled guilty.
In Stone, which involved a 103-count indictment, the defendant pled guilty under a plea agreement to Count 81 only. Similar to the second paragraph of the indictment in this case, Count 1 of the indictment in Stone described the entire mail fraud, credit card scheme that existed from April, 1985 to January, 1987. Stone, 948 F.2d at 701. The defendant in Stone, however, did not plead guilty to this count. Instead, that defendant pled guilty pursuant to a plea agreement to Count 81, which charged mail fraud on a specific company. Following Hughey, this court held that the district court erroneously ordered restitution that included financial losses to victims other than the company in Count 81, the only count of conviction. Id. at 704; see United States v. Jewett, 978 F.2d 248, 252 (6th Cir. 1992) ("The "specific conduct" for which [the defendant] was convicted was mail fraud, not executing a fraudulent scheme."); United States v. Sharp, 941 F.2d 811, 815 (9th Cir. 1991) ("[T]he presence of a scheme . . . . is too fine a point on which to distinguish Hughey, particularly since the indictment in Hughey also alleged a scheme."). But see United States v. Stouffer, 986 F.2d 916, 928-29 (5th Cir.) (upholding restitution to all victims irrespective of the counts of conviction under the rationale that all losses caused by a fraudulent scheme satisfy the specific conduct requirement of Hughey), cert. denied, 510 U.S. 837, 114 S.Ct. 115, 126 L.Ed.2d 80, and cert. denied, 510 U.S. 919, 114 S.Ct. 314, 126 L.Ed.2d 261 (1993); United States v. Brothers, 955 F.2d 493, 497 (7th Cir.) (same), cert. denied, 506 U.S. 847, 113 S.Ct. 142, 121 L.Ed.2d 94 (1992).

Without any recognition of the relevant version of the VWPA or Barnette, both of which controlled restitution at the time of Blaik's sentencing, the district court, in its order denying Blaik's Section(s) 2255 motion, distinguished Hughey on the basis of the negotiated plea:

Hughey ruled simply that the Victim and Witness Protection Act, 18 U.S.C. §(s) 3579, 3580, did not authorize the imposition of restitution for acts other than those underlying the offense of conviction. However, in the instant case, the entire mail fraud scheme was alleged in the counts to which the defendant pled guilty, and, most importantly, the defendant agreed as part of the plea bargain to reimburse all victims of his scheme. There was no such agreement in Hughey.

Neither the government nor Blaik's counsel appeared to have been aware of Barnette and its holding at sentencing or on direct appeal because neither cited it to the district court. Blaik, the defendant, should not be detrimented or effectively punished for this oversight concerning the law of our circuit. While the significance of Barnette, is to show that the plea agreement was unlawful and invalid when the parties agreed to it as well as when it was implemented at sentencing, the issue presented on appeal is not Barnette but the impact on the plea agreement and Blaik's resulting sentence of the Supreme Court's decision in Hughey. Since Blaik was sentenced on August 8, 1988, and Hughey was not decided until May 21, 1990, this case could not have been raised at his sentencing or on direct appeal and was the appropriate basis for his Blaik's Rule 35 motion. See Callanan v. United States, 364 U.S. 587, 589 n. 3, 81 S.Ct. 321, 322 n. 3, 5 L.Ed.2d 312 (1961) "Rule 35 is available to correct an illegal sentence when the claim is based on the face of the indictment even if such claim had not been raised on direct appeal." (citing Heflin v. United States, 358 U.S. 415, 418, 422, 79 S.Ct. 451, 453, 455, 3 L.Ed.2d 407 (1959)). The problem, however, is that the effect of Hughey on Blaik's restitution was not addressed on the merits by the district court or, consequently, this court because of counsel's failure to perfect a timely appeal. Nevertheless, Hughey, which appears to have retroactive effect, makes clear that Blaik's plea bargain and sentence as to restitution, including counts for which he was not convicted, were unlawful.
This court has held that we will not entertain an appeal based on a challenge to the sentence when an objection was not raised at sentencing unless "`manifest injustice'" will result. United States v. Milano, 32 F.3d 1499, 1503 (11th Cir. 1994) (quoting United States v. Jones, 899 F.2d 1097, 1103 (11th Cir.), cert. denied, 498 U.S. 906, 111 S.Ct. 275, 112 L.Ed.2d 230 (1990)). Because Hughey confirms the holding in Barnette that restitution cannot be ordered for counts of which a defendant was not convicted and the substantial difference in the restitution amounts ($3,000.00 for the two counts of conviction as opposed to $51,623.88 ordered for all counts), manifest injustice will result if we do not correct the restitution order in this case. See Gifford, 90 F.3d at 163 (reversing the district court's order requiring that the convicted defendant pay restitution in excess of the counts of conviction and citing Hughey).

In denying Blaik's section 2255 motion, the district court said that it "entered sentence pursuant to the plea agreement and ordered restitution to all 30 victims." R1-27-1.

In contrast, under the plea agreement in Young, the defendant received less incarceration time on the two counts on which he was convicted in exchange for paying more restitution. Recognizing that the "plea agreement essentially reduced the period of incarceration in return for Young's promise to make greater restitution" as part of the overall "sentencing plan," we enabled the district court at resentencing "to restructure its sentences on the two counts of bribery in order to approximate its intention for the original sentence," given its inability "to order significant restitution." Young, 953 F.2d at 1290. Thus, we could preserve for the government an opportunity to retain some benefit for its plea bargain. In that case, we were able to avoid an inequitable result for the government: "Having promised that he would repay any amount deemed appropriate `in order to induce sentencing leniency, [Young should] not retain the resulting benefits while retracting the undertaking on which the sentencing court has relied.'" Id. (citation omitted).
Regrettably, in this case, like United States v. Fuentes, 991 F.2d 700 (11th Cir. 1993) (per curiam), resentencing would serve no purpose, since Blaik received the maximum sentence on the counts of his conviction. Id. at 702 n. 3. Absent a parole violation, a separate offense, there is no opportunity to give him more incarceration time for the crimes of conviction. Blaik received a substantially more lenient sentence in exchange for agreeing to pay restitution to all thirty victims of his fraudulent scheme. By pleading guilty to two counts of mail fraud, each with a maximum imprisonment term of five years, Blaik reduced his sentencing exposure to only ten years of imprisonment. See 18 U.S.C. §(s) 1341. Since this was a Sentencing Guidelines case, Blaik's sentence potentially could have been 150 years if he had proceeded to trial and had been convicted on all thirty counts of the indictment.
Following its conclusive investigation, complete with victims' monetary losses, the government would have had a strong case against Blaik had it proceeded to trial. Blaik apparently agreed or he would not have pled guilty, which he obviously did to avoid a significant term of imprisonment. While the government has lost the benefit of its plea bargain, which principally was restitution to the victims, it should have been aware at the time of entering into the negotiated plea that the VWPA and Barnette limited restitution to crimes of conviction. See United States v. Baugh, 787 F.2d 1131, 1133 (7th Cir. 1986) (per curiam) ("A prosecutor has absolutely no authority to negotiate for or secure a sentence that exceeds the statutory maximum for the offense of which the defendant will be convicted.").