UNITED STATES OF AMERICA v. DAVID M. ADAMS
No. 18-3650
United States Court of Appeals For the Second Circuit
April 7, 2020
August Term 2019
Argued: October 10, 2019
UNITED STATES OF AMERICA,
Appellee,
v.
DAVID M. ADAMS,
Defendant-Appellant.
Appeal from the United States District Court for the District of Connecticut No. 16-cr-86, Vanessa L. Bryant, Judge.
Before: LYNCH, LOHIER, AND SULLIVAN, Circuit Judges.
Defendant-Appellant David Adams challenges his conviction and sentencing following his guilty plea on assorted tax offenses. He asserts six claims for relief, including that the district court (Vanessa L. Bryant, J.) erred in denying his motion to withdraw his guilty plea, in calculating the tax loss, and in imposing restitution. We conclude that Adams is correct that the district court lacked authority to require restitution payments to begin immediately following his sentencing. In all other respects, however, Adams‘s claims are unavailing. We therefore affirm the district court‘s judgment as modified. In reaching this determination, we hold that, in assessing tax loss pursuant to
AFFIRMED AS MODIFIED.
JEREMIAH DONOVAN, Old Saybrook, Connecticut (William T. Koch, Jr., Old Lyme, Connecticut, on the brief), for Defendant-Appellant David M. Adams.
SUSAN L. WINES, Assistant United States Attorney (Sandra S. Glover, Assistant United States Attorney, on the brief), for John H. Durham, United States Attorney for the District of Connecticut, New Haven, Connecticut, for Appellee United States of America.
Defendant-Appellant David Adams appeals from a judgment of conviction entered on November 27, 2018, in the United States District Court for the District of Connecticut (Vanessa L. Bryant, Judge), following his guilty plea to assorted tax offenses, including making and subscribing to a false tax return, tax evasion, and attempting to interfere with the administration of the internal revenue laws. Adams raises six contentions, including that the district court erred in denying his motion to withdraw his guilty plea, in calculating the tax loss for purposes of sentencing, and in imposing an order of restitution
I. Background
The district court was justified in finding the following facts, based on Adams‘s statements under oath during his plea allocution and the facts set forth in the presentence investigation report (“PSR“), which was adopted by the district court without substantial objection from Adams at sentencing. Over the course of at least 14 years, Adams engaged in a concerted campaign to obstruct the IRS‘s efforts to collect his delinquent tax payments and to secure overdue tax returns. He lied to and manipulated his accountant, filed extension requests containing false information, claimed to have made payments that he had not made, missed deadlines, lied that checks were in the mail, unjustifiably blamed his accountant for errors and delays, bounced checks, and fraudulently claimed financial distress at times when he had the funds necessary to pay his tax liability, all the while spending lavishly on a lifestyle that included purchasing and leasing multiple luxury vehicles, spending millions to construct a mansion in East Lyme, Connecticut, and staying at upscale hotels.
A grand jury eventually charged Adams in a six-count superseding indictment. Counts One, Three, and Five charged Adams with making and subscribing to false tax returns for the years 2009, 2011, and 2012, in violation of
Adams pleaded guilty to the superseding indictment on October 10, 2017. During the change of plea hearing, the government informed Adams in open court about the potential terms of imprisonment, fines, and restitution that he faced as a result of the charges. For Counts One, Three, and Five – the making and subscribing to false tax return offenses – the government advised Adams that “[e]ach . . . count[] carrie[d] with it a statutory maximum term of imprisonment of up to three years; . . . and under the alternative minimum fine provision, a fine of the greatest of twice the gross gain to the defendant resulting from the offense, twice the gross loss resulting from the offense, or $100,000.” Gov‘t App‘x at 136.
The government also stated that it would “be seeking restitution on those counts.” Id. For Counts Two and Four – the tax evasion offenses – the government informed Adams that each “count carrie[d] with it a maximum statutory term of imprisonment of up to five years; . . . [and] again, the alternative minimum fine provision as [the government] recited for the false return counts.” Id. at 137. For Count Six – the attempt to interfere with the administration of the internal revenue laws – the government explained that Adams faced “a potential term of imprisonment of up to three years [and] a $5,000 fine.” Id. During the hearing, Adams represented under oath that he understood the “potential penalties and fines” and further stated that he had discussed them with his counsel. Id. at 138. He made similar representations in his written Petition to Enter a Plea of Guilty, which he executed prior to the plea hearing. Id. at 391 (“I fully understand the sentence which the Court may impose, including
Several months later, the Probation Office issued a PSR that reiterated these maximum penalties and fines. It twice listed the maximum imprisonment terms for each of the six counts, and calculated the sentencing range under the United States Sentencing Guidelines (“U.S.S.G.“) to be 78 to 97 months. It also advised that the maximum fine for each of Counts One through Five was $100,000, while the maximum fine for Count Six was $5000. During the sentencing proceeding that took place on November 27, 2018, Adams acknowledged that he had an opportunity to read the PSR and raised no objections to it.
The district court sentenced Adams principally to 90 months’ imprisonment and $4,872,172.91 in restitution payable to the IRS. On appeal, Adams asserts six separate challenges to his conviction and sentencing. We address each contention in turn.
II. Adams Is Not Entitled to Withdraw His Guilty Plea
Adams argues that he should be “permitted to withdraw his plea” because the district court violated Rule 11 when it (1) failed to apprise him that the sentences for his convictions could run consecutively, (2) misinformed him about the maximum fine he faced, and (3) incorrectly represented the scope of restitution. Adams‘s Br. at 21; see also id. at 9-16. Though he acknowledges that “Rule 11 deficiencies frequently do not result in reversals because the complained-of error is frequently hypertechnical and the appellant is unable to prove harm,” he counters that these failings were “whopper[s]” and thus “[t]he harm is obvious” – he “pleaded guilty thinking that he could be sentenced to a maximum of five years” and “would not have pleaded guilty if he knew that he could be sentenced to more than five years.” Id. at 20.
Because Adams did not object to the purported Rule 11 violations before the district court, we review them for plain error. United States v. Espinal, 634 F.3d 655, 658 (2d Cir. 2011). “In the context of a Rule 11 violation, to show plain error, a defendant must establish that the violation affected substantial rights and that there is ‘a reasonable probability that, but for the error, he would not have entered the plea.‘” United States v. Vaval, 404 F.3d 144, 151 (2d Cir. 2005) (quoting United States v. Dominguez Benitez, 542 U.S. 74, 83 (2004)).
Rule 11 requires that, “[b]efore the court accepts a plea of guilty . . . , the court must inform the defendant of, and determine that the defendant understands . . . any maximum possible penalty, including imprisonment, fine, and term of supervised release[,] . . . [and] the court‘s authority to order restitution.”
Adams has not established plain error under Rule 11. As an initial matter, contrary to Adams‘s interpretation of Rule 11, a district court‘s failure to advise a defendant that sentences could run consecutively does not render a guilty plea invalid. See United States v. Vermeulen, 436 F.2d 72, 75 (2d Cir. 1970) (finding that the district court fulfilled its Rule 11 obligations where it informed defendant of the terms of imprisonment he could receive on each of two counts despite not using the words “consecutive” or “consecutively“);
“implicitly alerted [defendant] to the possibility of consecutive sentencing“). Numerous other courts agree with this interpretation of Rule 11. See, e.g., United States v. Burney, 75 F.3d 442, 445 (8th Cir. 1996) (finding no error where district court advised defendant of the maximum imprisonment term for each count, thereby implicitly disclosing “the possibility of consecutive sentencing“); United States v. Ospina, 18 F.3d 1332, 1334 (6th Cir. 1994) (determining that “there is no requirement in [Rule] 11 that the court explicitly admonish a defendant that a sentence may be imposed consecutively“); United States v. Rubalcaba, 811 F.2d 491, 494 (9th Cir. 1987) (concluding that “[t]he trial court need not inform the defendant that the sentences to each count may run consecutively“). Accordingly, we hold that Rule 11 did not require the district court to explicitly inform Adams that his sentences could run consecutively.1
Here, the record amply demonstrates that the district court fulfilled its obligations under Rule 11. At the plea colloquy, Adams was informed of the maximum term of imprisonment and maximum fine for each count. Adams was also advised that the government would seek restitution, thereby alerting him to
the possibility that the court may order restitution. Adams represented under oath during the plea colloquy that he understood these potential penalties and fines.
In any event, Adams cannot show an effect on his substantial rights from any purported deficiency in the plea colloquy. Prior to sentencing, aside from objecting to the inclusion of interest and penalties in the tax loss, Adams made no objection to any of the provisions in the PSR that addressed penalties, fines, or restitution. Adams‘s assertion that he was misinformed about the potential fine is particularly unpersuasive. Although the government mistakenly advised him that he faced a fine of the greatest of twice the gross gain, twice the gross loss, or $100,000 (as set forth in Title 26), instead of the greatest of twice the gross gain, twice the gross loss, or $250,000 (as set forth in
Adams also asserts that, though he “was informed during the plea proceeding that the government would seek restitution arising out of his filing of false returns for
2008 taxes.” Adams‘s Br. at 35. Therefore, Adams argues that his plea was not knowing and intelligent, as required by Rule 11. Once again, Adams cannot demonstrate plain error, since he was informed numerous times of the court‘s authority to order restitution for his offenses – before sentencing, during the sentencing hearing, and after restitution was ordered – and never objected to that restitution.
The PSR advised Adams that “[r]estitution may be ordered in this case” under
from 2002, 2006, 2007, and 2008, and (3) his counsel acknowledged during the sentencing hearing that the court was likely to order restitution in the amount of $4.8 million – a figure that expressly included losses from 2002, 2006, 2007, and 2008. Put simply, Adams cannot demonstrate plain error affecting substantial rights with respect to the scope of restitution. See Vaval, 404 F.3d at 152.
Accordingly, Adams‘s attempts to manufacture plain error in the plea allocution process fail.
III. The District Court Properly Calculated the Tax Loss
Adams also contests the district court‘s inclusion of “accrued interest and tax penalties in calculating the tax loss.” Adams‘s Br. at 27. He maintains that “[b]ecause [he] was not convicted of a willful evasion of payment under
Under the federal tax code, a taxpayer who owes taxes and fails to file a return or pay those taxes on time will be assessed interest and penalties on top of the initial tax.
pay taxes); id.
But not every dollar owed to the IRS is counted as “tax loss” for sentencing purposes in a criminal tax prosecution. Generally speaking, the federal sentencing guidelines provide that the “tax loss” resulting
Here, the district court determined the tax loss to be $4,253,798.49, which included $3,375,094.49 of back taxes, interest, and penalties for 2002, 2006, 2007, 2008, 2009, and 2011, and $878,704 of tax due on income that Adams failed to declare in 2011 and 2012. Since he did not plead guilty to a violation of
interest and penalties in the loss amount. The issue thus presented is whether the exception to
Although this is an issue of first impression in our Court, at least two of our sister Circuits have held that convictions are not required for the exception to apply. In United States v. Black, 815 F.3d 1048 (7th Cir. 2016), a jury convicted the defendant “of one count of obstructing and impeding the IRS from collecting taxes” in violation of
In reaching this conclusion, the court noted that the Sentencing Guidelines themselves provide that “[u]nless . . . an express direction is included [in a Guidelines provision], . . . use of a statutory reference to describe a particular set of circumstances does not require a conviction under the referenced statute.”
Since “the statutory reference in . . .
payment cases” under
The district court below determined that Adams‘s conduct involved the willful evasion of taxes, and that the tax loss should therefore include interest and penalties. The court did not clearly err in making this determination. The record overwhelmingly demonstrated that the object of Adams‘s offenses was willful evasion of payment: he lied to and manipulated his accountant, filed extension requests containing false information, claimed to have made payments that he had not made, missed deadlines, lied that checks were in the mail, unjustifiably blamed his accountant for errors and delays, bounced checks, and fraudulently claimed financial distress at times when he had the funds necessary to pay his tax liability. In pleading guilty, Adams admitted under oath that he willfully overestimated his tax payments “so as to lower [his] [tax] liability,” willfully failed to declare income from the sale of his business, and willfully failed to cooperate with the IRS‘s efforts
to collect his taxes by bouncing checks and being deceitful about payments and assets. Gov‘t App‘x at 147. We find no error in the district court‘s interpretation of Adams next asserts that the district court wrongly assessed a two-level enhancement for obstruction of justice pursuant to Under section provides that “[o]bstructive conduct that occurred prior to the start of the investigation of the instant offense of conviction may be covered by this guideline if the conduct was purposefully calculated, and likely, to thwart the investigation or prosecution of the offense of conviction.” We need not consider whether Adams‘s pre-indictment conduct could justify the enhancement because a two-level enhancement for obstruction was warranted based entirely on the district court‘s explicit finding that Adams had obstructed proceedings in this case even after the indictment was returned. Specifically, the district court determined that Adams had “willfully engaged” in a game of “cat and mouse” – “not only with the Internal Revenue Service, but also with this Court where he employed the same tactics of deceit and [obfuscation] to evade his tax liability and the criminal consequences of his convictions.” Gov‘t App‘x at 329. The court determined that Adams used the year between his guilty plea and his sentencing to make “financial arrangements” regarding his finances during presentence investigation supported Accordingly, the district court did not err in determining that Adams willfully obstructed or impeded the administration of justice, thereby warranting a two-level sentence enhancement under Adams raises a litany of claims attacking the validity of the district court‘s restitution order. Once again, Adams did not object to the restitution order at the time of sentencing. Therefore, we review for plain error. United States v. Zangari, 677 F.3d 86, 91 (2d Cir. 2012). Adams asserts that “the district court was not authorized to issue any restitution order at all” because “[n]o statute authorizes a court to impose a restitution order when sentencing for the violations of the tax code provisions that were the subject of this indictment.” Adams‘s Br. at 33-34 (citing Adams is correct that the court exceeded its authority by ordering restitution as part of the judgment “to begin immediately,” Gov‘t App‘x at 361, since neither As a practical matter, we have long recognized the power to modify judgments to conform with the district court‘s authority and to affirm them as modified, “as may be just under the circumstances.” Adams next maintains that the district court erred by “order[ing] restitution for four additional tax years that were not the subject of the evasion or false statement convictions,” since “[a] district court‘s restitution order ordinarily is limited by the loss charged in the count of conviction.” Adams‘s Br. at 35. Once again, Adams is mistaken. The law is clear that a district court may order restitution to the victim “of the offense” as a condition of supervised release. Adams also claims that “the restitution order included taxes and penalties that were outside the statute of limitations.” Adams‘s Br. at 36. We disagree. Violations of for a violation of Adams finally contends that the restitution amount impermissibly included accrued interest and penalties. Adams‘s Br. at 36. He is again incorrect. The restitution amount properly included $618,374.42 in accrued interest through May 30, 2018, but did not include any “accrued penalties.” Federal tax law imposes interest on tax delinquencies to compensate the government for the time-value of its monetary loss. See properly included accrued interest in the With little elaboration, Adams perfunctorily contends that this Court “should vacate the sentences imposed on counts three and five” because “a conviction under Section 7206(1) for filing . . . false returns merges into a conviction under Section 7201 for the inclusive fraud of tax evasion.” Adams‘s Br. at 38. We need not consider the merits of Adams‘s claim because it is waived. A defendant generally may not raise a constitutional double jeopardy claim on appeal unless it was raised prior to his guilty plea. See United States v. Leyland, 277 F.3d 628, 632 (2d Cir. 2002) (holding that “[t]o preserve his [double jeopardy] claims, [defendant] needed to raise his double jeopardy argument before pleading guilty“). Indeed, the law is clear that “[c]ourts will conclude that a defendant‘s guilty plea waived his double jeopardy claims even if the defendant does not know about the claim at the time of the plea.” Id. “Conscious relinquishment of the double jeopardy claim is not required because the guilty plea constitutes an admission sufficient to establish that [a] defendant committed a crime, not an ‘inquiry into a defendant‘s subjective understanding of the range of potential defenses.‘” Id. (quoting United States v. Broce, 488 U.S. 563, 573-74 (1989)). There is, however, a limited exception to this bar “where on the face of the record the court had no power to enter the conviction or impose the sentence,” Broce, 488 U.S. at 569, such as where the statute under which the defendant was convicted is unconstitutional, Class v. United States, 138 S. Ct. 798, 804-05 (2018). That was clearly not the case here. Consequently, because Adams had the opportunity to challenge the superseding indictment on double jeopardy grounds before pleading guilty but chose to forego that option, he has waived the claim for appellate review. Adams maintains that the district court “violated [his] right to be sentenced by a fair and impartial tribunal” because it allegedly considered published news articles and reader comments on those articles that the government submitted as part of its sentencing memorandum. Adams‘s Br. at 42. He accuses the district court of being “tainted by the government‘s reliance on the views of . . . anonymous bloggers,” and “requests that the case be remanded for sentencing before a [different] sentencing judge.” Id. at 44. Adams fails to establish that the district court abused its discretion in considering the government‘s submission. Adams‘s claim that he was deprived of a “fair and impartial tribunal” is a claim that the district court committed procedural error in its consideration of the The district court did not abuse its discretion in considering the news articles and reader comments, since they were relevant to assessing various factors pursuant to memorandum, the government referred to online reader comments from published newspaper articles that reported on Adams‘s trial and guilty plea. As part of its contention that a substantial sentence was necessary to promote respect for the law, the government cited comments from three readers, who opined: (1) “White collar crime is not prosecuted like other crimes. The courts will throw someone in jail for stealing food to eat but guys like this get four or five passes. After all it depends on who you are and know.” (2) “Adams subscribes to the same disregard for the rule of law and dishonesty, immorality and corruption of privileged entitlement that is rampant in DC. We have personally experienced his refusal to pay what he owes.” (3) “Here‘s a prediction: They‘ll settle with this crook for half of what he actually owes, put him on a payment plan (which he won‘t pay), and give him 30 days [sic] house arrest in one of his lavish houses. He‘ll save half of his tax obligation and be able to take a vacation. Smart business. Let‘s see what happens.” Gov‘t App‘x at 474-75. With respect to the need for the sentence to reflect a just punishment, the government cited comments from two additional readers, who observed: (1) “The Day article might have been more informative if it had included a photo of the individual, as well as a photo of his magnificent estate and grand mansion at [REDACTED] Scott Road. The public would benefit from knowing more about this poor man who can‘t pay his taxes, and his modus operandi.” (2) “I have no doubt that he is a nice guy to his family and those in his personal circle. But the fact is that he chose not pay his taxes . . . . Some of us work hard and struggle to pay our taxes and follow the law and we do so on probably a quarter of his income, without multiple grand homes, car collections, vacations and all the bonuses of the wealthy life. I‘m a really nice person, and I know a lot of really nice people, but we contribute by paying our fare [sic] share and being honest, helpful citizens. I am not about to assassinate Mr. Adams’ character here, and I hope this thread doesn‘t go there, but what he DID was WRONG and this is not the first time he has worked the system to enhance his own wealth . . . .” Id. at 475-76. In denying Adams‘s motion to strike the newspaper articles and reader comments from the government‘s sentencing submission, the district court concluded that those materials “[we]re relevant to the subject matter for which they [we]re cited, specifically, the need for the sentence to promote respect for the law on the part of the general public.” Id. at 37. We cannot say that it was an abuse of discretion for the court to consider these comments in Finally, Adams asserts a host of ways in which the district court was allegedly hostile to him over the course of the proceedings. He complains that the court was skeptical of or rejected certain contentions he made at sentencing, including that his criminal history had been overstated and that his conduct had not physically harmed anyone, and that the court would not hear from his relatives who had submitted letters on his behalf, though it did hear from Adams‘s former accountant as a victim of Adams‘s crimes. However, “claims of judicial bias must be based on extrajudicial matters, and adverse rulings, without more, will rarely suffice to provide a reasonable basis for questioning a judge‘s impartiality.” Chen v. Chen Qualified Settlement Fund, 552 F.3d 218, 227 (2d Cir. 2009) (citing Liteky v. United States, 510 U.S. 540, 555 (1994)). Furthermore, the district court did allow Adams‘s family members to give statements at sentencing. Consequently, Adams‘s complaints are meritless. For the foregoing reasons, we AFFIRM Adams‘s conviction and sentence, though we MODIFY the judgment to provide that restitution is only a condition of supervised release and is not due until Adams commences his term of supervised release.IV. The District Court Properly Concluded That Adams Obstructed Justice
V. Although the District Court Erred in Ordering the Payment of Immediate Restitution, the Court Had the Authority to Order Restitution as a Condition of Supervised Release
A.
B.
C.
VI. Adams‘s Double Jeopardy Claim Has Been Waived
VII. Adams Was Not Deprived of His Right to a Fair and Impartial Tribunal
CONCLUSION