Defendant-Appellant Thomas P. Carroll challenges the district court’s offense-level calculations under the United States Sentencing Guidelines and resulting sentence of 262 months’ incarceration for his admitted involvement in an immigration visa fraud operation while employed in Guyana as a United States foreign service officer. For the reasons set forth below, we vacate Carroll’s sentence and remand the case to the district court with instructions to sentence Carroll in a manner consistent with this opinion.
BACKGROUND
Prior to his arrest in March 2000, Carroll, a United States citizen, served as a foreign service officer with the United States Department of State. As a vice-counsel in the United States Embassy in Georgetown, Guyana, from March 1998 until his arrest, he had discretionary authority to issue non-immigrant United States visas.
1
In abuse of this capacity, he coordinated the illegal sale of hundreds of fraudulent visas through local brokers with whom he shared an average of $10,000 in bribe proceeds per visa. One such broker was Guyanese citizen Halim Khan, upon whom Carroll also relied to assist in the laundering of illicit profits. Though many fraudulent (and perhaps even some legitimate) visa applications were supported by forged documents (supplied by Khan), Carroll nonetheless insisted that all visa applicants, both legitimate and fraudulent, undergo mandatory background security checks.
2
Because the visa scheme involved
Consequent to a routine reassignment of duties in March 1999, Benedict Wolf replaced Carroll at the non-immigrant visa desk. Carroll, who remained at the embassy in Guyana on a different assignment, took advantage of Wolfs one-week absence in August 1999 to issue up to 50 additional illegal visas. Carroll later recruited Wolf to issue 250 illegal visas to Khan’s clients in exchange for $1,000,000. In so doing, Carroll played directly into the hands of law enforcement officials who, during the course of their ongoing investigation of Carroll’s activities, had recruited Wolf to serve as an informant.
Carroll and Khan were arrested in March 2000 and each was charged with (i) conspiracy to defraud the United States, in violation of 18 U.S.C. § 371; (ii) production and issuance of false United States visa documents, in violation of 18 U.S.C. § 1028; and (iii) bribery of a public official, in violation of 18 U.S.C. § 201. The indictment also alleged joint and several forfeiture to the United States of traceable illegal visa proceeds (pursuant to 18 U.S.C. § 982) or substitute assets (pursuant to 21 U.S.C. § 853) in the amount of $1,140,000. 3
Meanwhile, back in the United States, Carroll engaged in a series of candid proffer sessions with an Assistant United States Attorney, during which he detailed his criminal activities and those of his associates. The proffer sessions preceded unsuccessful plea agreement negotiations, in which the United States approved a 57-month prison sentence recommendation but refused to recommend a downward departure for Carroll’s substantial assistance, pursuant to U.S.S.G. § 5K1.1. Instead, on the advice of counsel, Carroll entered guilty pleas on all charges without the benefit of an agreement. He further conceded forfeiture liability in the amount of $2,500,000 (more than double the amount included in the indictment), though he contested the forfeiture of six brokerage accounts named in the indictment. The district court then ordered a Presen-tence Investigation Report (PSR). Carroll explained to the probation officer preparing the PSR that his wife’s premarital assets totaled $28,000 and that his legitimate savings, aggregated with his wife’s assets, amounted to as much as $100,000, which he felt the government should exempt from forfeiture.
Revised to reflect various changes proposed by either party, the PSR calculated Carroll’s total offense level to be 27, corresponding to a prison term ranging from 70 to 87 months for an offender with Carroll’s criminal history. Both the United States and Carroll raised numerous objections to the PSR calculation and moved for departures from the U.S.S.G., and the district court held an extensive sentencing hearing. By Memorandum and Order dated June 13, 2002, the district court overruled Carroll’s objections to the PSR, denied Carroll’s motion for a downward departure, sustained the United States’ objections to the PSR, and granted the United States’ motions for an upward departure. Specifically, the district court ruled that (i) the Probation Department properly calculated the loss amount associated with Carroll’s conduct to be between $5 million and $10 million; (ii) Carroll’s statements during the plea colloquy and to the probation
Carroll now challenges the district court’s findings that he obstructed justice and that he did not accept responsibility for his actions, as well as its decision granting the United States’ upward departure motions.
ANALYSIS
The district court’s application of the Sentencing Guidelines is an issue of law, which we review de novo. We review the district court’s findings of fact for clear error, and will reverse only those findings which, after our consideration of all of the evidence, leave us with the “definite and firm conviction that a mistake has been committed.”
United States v. Irby,
The district court found that “Carroll knowingly misled [it] and the Probation Department in an attempt to affect [its] forfeiture determination,” for which reason it applied a two-level obstruction of justice enhancement pursuant to USSG § 3C1.1.
United States v. Carroll,
No. 00 CR 195-2, op. at 9,
During the plea colloquy, the United States recited a long list of Carroll’s assets which it determined to be derived from illegal visa proceeds and therefore subject to forfeiture. Carroll entered a plea of guilty on the forfeiture allegations. Carroll’s counsel then indicated Carroll’s admission that these assets were tainted with illegal profits and thus subject to forfeiture, with the exception of six specific brokerage accounts. The district court then asked Carroll directly whether those six counts were exceptions, to which Carroll replied, “That’s correct.” Carroll offered no further explanation for the exceptions, however, and the fact that none was solicited suggests to this Court — as it did to the probation officer conducting the pre-sentence investigation — an understanding among the parties and the district court that Carroll would later clarify and qualify this position. In fact, the district court judge informed counsel that, given the “broad language in the indietment[,] at sentencing we can thrash that out, and you both can present whatever evidence you deem appropriate” with respect to the forfeiture allegation. Instead, Carroll clarified his position during an interview with the investigating probation officer by indicating that, although those six accounts contained tainted proceeds commingled with legitimate savings, he believed his wife’s premarital assets, together with his legitimate savings within those accounts, amounted to as much as $100,000.
Applieation Notes 4(f) and 4(h) to U.S.S.G. § 3C1.1 fist as examples of obstructive conduct “providing materially false information to a judge or magistrate” or to “a probation officer in respect to a presentence or other investigation for the court.” Application Note 6 further defines “materiality” as follows: “ ‘Material’ evidence, fact, statement, or information, as used in this section, means evidence, fact, statement, or information that, if believed, would tend to influence or affect the issue under determination.” Assuming, arguen-do, that Carroll’s statements to the district court and the investigating probation officer were knowingly inaccurate, 5 we find that they do not amount to material falsehoods within the meaning of U.S.S.G. § 3C1.1 and its Application Notes, insofar as they had no impact on his forfeiture liability. By pleading guilty to a $2.5 million forfeiture allegation where the United States had seized only $1.7 million in assets, it was of zero consequence whether the seized assets were legitimately or illicitly derived, in light of the provision in 21 U.S.C. § 853 for the forfeiture of substitute of assets in satisfaction of a forfeiture judgment. In other words, all of Carroll’s property was subject to forfeiture regardless of its source.
In applying the obstruction enhancement, the district court relied on federal appellate decisions from other circuits affirming obstruction enhancements based on materially false statements where a defendant intentionally minimized and con
The instant case is distinguishable in two respects. First, unlike the defendants in Anderson, Nelson, or Smaw, nowhere does the record reveal an attempt by Carroll to conceal assets. Overestimating the amount of legitimate assets commingled with illicit assets is a far cry from concealing the very existence of assets from investigators or the court. 6 Secondly, Carroll’s ability to pay fines or restitution is not at issue here because the substitute forfeiture provision of 21 U.S.C. § 853 subjects Carroll’s every last penny to forfeiture. Regardless of either the source of the funds in the six accounts or the exact amount of Carroll’s legitimate assets, after the forfeiture of $2.5 million, he retains nothing with which he might pay fines or restitution. 7
In short, any inaccuracies in Carroll’s statements to the district court or the probation officer regarding his finances, whether made knowingly or not, were not material falsehoods within the meaning of U.S.S.G. § 3C1.1. The district court’s application of a two-level enhancement for obstruction of justice was therefore improper.
Based in part on its finding that Carroll obstructed justice, the district court sustained the United States’ objection to the Probation Department’s recommendation of a three-level reduction, pursuant to U.S.S.G. § 3E1.1, for Carroll’s acceptance of responsibility for his conduct. U.S.S.G. § 3E1.1 provides for a two-level reduction for a defendant who clearly demonstrates an acceptance of responsibility for his offense and an additional one-level reduction if the defendant timely provides complete information to the government regarding his involvement in the offense or timely notifies the prosecution of his intention to plead guilty, thereby conserving judicial and prosecutorial resources by avoiding a trial. In refusing to reduce Carroll’s offense level for acceptance of responsibility, the court relied upon Application Note 4 to U.S.S.G. § 3E1.1, which provides that obstructive conduct resulting in an enhancement pursuant to U.S.S.G. § 3C1.1 “ordinarily indicates that a defendant has not accepted responsibility for his crime.”
See also United States v. Ojo,
In reviewing the district court’s decision to depart upward from the applicable sentencing guideline range, this Court considers the following three factors: (i) whether the grounds for the departure were appropriate; (ii) whether or not the district court’s factual findings regarding the departure are clearly erroneous; and (iii) whether the extent of the resulting upward departure was reasonable.
Leahy,
Several facts direct our immediate attention to the issue of the reasonableness of the district court’s resulting application of four upward departures, the third factor discussed in
Leahy.
First, just prior to Carroll’s plea colloquy, the United States approved the plea agreement calling for a 57-month prison term. However, Carroll was dissatisfied with the government’s re
CONCLUSION
For the preceding reasons, we Reverse the district court’s order calculating Car
Base Offense Level (Bribery) 10 (201.1(a))
Specific Offense Characteristics
Involved multiple bribes $5 million < loss amount 2 (201.1(b)(1))
< $10 million 14 (201.1(b)(2)(A) & 2F1.1)
Adjustments for
Organizer/Leader Role 4 (3.Bl.l(a))
Obstruction of Justice 0 (3C1.1)
Acceptance of Responsibility -3 (3El.l(a))
Downward Departures Substantial Assistance 0
Upward Departures
Loss of Public Confidence in Government 0
Significant Disruption of Govt. Function 0
Danger to the Public Welfare 0
Use of Threats of Violence & Resulting Property Damage 0
TOTAL OFFENSE LEVEL 27
Notes
. A non-immigrant visa permits an alien to visit the United States for a limited time period on the condition that the alien will depart no later than the date of its expiration.
. We can only speculate as to whether Carroll’s insistence on this point was made owing to some atrophied sense of moral accountability that subsisted improbably along the periphery of Carroll's depravity and greed or, more likely, in order to avoid the scheme's detection as a result of subsequent similar checks conducted by immigration authorities.
. The internal investigation that followed Carroll’s arrest caused a two-week disruption of consular operations at the embassy, though the issuance of emergency and diplomatic visas was unaffected.
. The district court calculated Carroll's total offense level as follows:
Factor: Level & U.S.S.G. provision:
Base Offense Level (Bribery) 10 (2C 1.1(a))
Specific Offense Characteristics
Involved multiple bribes 2 (2C1.1(b)(1))
$5 million < loss amount < $10 million Adjustments for 14 (2C 1.1 (b)(2)(A) & 2F1.1)
Organizer/Leader Role 4 (3.Bl.l(a))
Obstruction of Justice 2 (3C1.1)
Acceptance of Responsibility 0 (3El.l(a))
Downward Departures
Substantial Assistance 0
Upward Departures
Loss of Public Confidence in Government 2 (2C1.1, Note 5)
Significant Disruption of Govt. Function 1 (5K2.7)
Danger to the Public Welfare 2 (2K2.14)
Use of Threats of Violence & Resulting Property Damage 2 (5K2.5)
TOTAL OFFENSE LEVEL. 39
. The district court relied on evidence of Carroll’s ordinarily "meticulous” management of his finances as proof of his deceptive intent during the plea colloquy and the presentence investigation. We are not similarly persuaded. Evidence of Carroll's historical financial vigilance does not obviate the fact that (i) his representations during the plea colloquy were merely undeveloped, preliminarily adopted legal positions and (ii) Carroll's statements to the probation officer were made (A) without the benefit of his having reviewed his financial records and (B) during his twentieth month in federal custody (notwithstanding the United States' argument that its production of his financial records during discovery afforded him access thereto).
. Application Note 2 to U.S.S.G. § 3C1.1 contemplates precisely such a distinction: “In applying this provision in respect to alleged false testimony or statements by the defendant, the court should be cognizant that inaccurate testimony or statements sometimes may result from confusion, mistake, or faulty memory and, thus, not all inaccurate testimony or statements necessarily reflect a willful attempt to obstruct justice." Considering the duration of Carroll’s illegal conduct and the number of commingled accounts involved, confusion, mistake, and Carroll’s faulty memory presumptively explain his inaccurate estimates of legitimate funds relative to illegitimate. The United States has the burden of proving Carroll’s deceitful intent. It has not.
. Significantly, the district court did not order Carroll to pay any fine or restitution.
. In fact, from the information obtained during just the first two proffer sessions, the United States produced a 19-page, single-spaced, remarkably detailed documentation of Carroll's own account of his conduct.
. That Carroll did not accept the prosecution’s plea agreement, as the United States anticipated, but instead opted to enter a "blind” guilty plea, does not make him ineligible for the one-level reduction. Although his rejection of the agreement resulted in a lengthy sentencing hearing, he nonetheless permitted the United States to avoid preparing for trial.
. For instance, despite the suspicions of the investigators and prosecutors, no hidden assets were discovered subsequent to Carroll’s guilty plea.
. During oral argument, the Assistant United States Attorney suggested that, had Carroll simply accepted the plea agreement, Hargobin Mortley, a cooperating government witness who provided security for Carroll's visa fraud scheme, would not have had to testify against Carroll at his sentencing hearing and thereby incur the risks associated with implicating other corrupt Guyanese police officials. While this development may have resulted in a frustrating increase in the prosecution's workload, it is no justification for an upward departure in Carroll's offense level.