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UNITED STATES v. MICHALEK

February 11, 1993

UNITED STATES OF AMERICA, Plaintiff,
v.
JAMES J. MICHALEK, Defendant.


ARCARA


The opinion of the court was delivered by: RICHARD J. ARCARA

DECISION AND ORDER

INTRODUCTION

 Presently before the Court is defendant James J. Michalek's motion for reconsideration of an Order of this Court dated October 30, 1992, [hereinafter "October Order"]. The Court held, in the October Order, that defendant had waived his right to file objections to the Presentence Report ("PSR") by failing to timely file such objections, and that even had he not waived the right, the amount of loss sustained by the victim banks was properly calculated in the PSR.

 To the extent defendant's motion seeks reconsideration of the waiver issue and the calculation of the amount of loss, it is granted. However, the Court notes that defendant also attempts to use his motion for reconsideration to raise additional factual objections to the PSR. These additional objections not having been addressed in the October Order, the issue before the Court is not reconsideration, but rather, whether the recommendations in the PSR should be adopted.

 Upon reconsideration, and after reviewing the submissions of the parties and hearing argument from counsel, the Court affirms its decision in the October Order that defendant waived his right to object to the PSR and that the amount of loss was properly calculated at over $ 2 million. Despite this finding, however, the Court has considered defendant's additional objections to the PSR, and after reviewing the submissions and hearing argument, adopts the recommendations of the PSR en toto.1

 BACKGROUND

 Defendant's motion for reconsideration and his objections to the PSR must be considered and understood in the context of this case's extensive and convoluted post-verdict procedural history. Defendant was charged with seven counts of submitting false statements to banks, (Counts I, II, III, IV, V, VI and VIII), and one count of mail fraud (Count VII). On December 20, 1991, following a five-week jury trial, defendant was found not guilty as to Counts I through IV, and guilty as to Counts V through VIII. Sentencing was scheduled for March 6, 1992, and defendant was released on a $ 10,000 signature bond over the government's objection.

 On January 2, 1992, defendant and one of his court-appointed attorneys, Patrick J. Brown, Esq., met with the Probation Department for the purpose of providing information relevant to its preparation of the PSR. On January 24, 1992, at the government's request, the Court issued a warrant for defendant's arrest as a result of information from the government that defendant had failed to appear for state criminal proceedings, and information from the Probation Department and his attorneys that they had been unable to contact him. The government's information subsequently revealed that defendant had left the Western District of New York on January 10, 1992, on a USAir flight from Syracuse, Now York to Baltimore, Maryland, and then to the Bahamas.

 The Probation Department's preparation of the PSR was completed on February 11, 1992, and on February 14, 1992, copies were sent to the government and defense counsel, and to defendant at his last known address. Attached to the PSR sent to defendant and his attorneys was a copy of the Local Procedural guidelines to Govern Sentencing Procedures under the Sentencing Reform Act of 1984 in the Western District of New York ("Local Guidelines"), and a cover sheet warning of the possible implications of failing to timely comply with the Local Guidelines' objection requirements.

 The Probation Department calculated defendant's offense level at 22 and his criminal history category at II, resulting in a guideline range of imprisonment of 46 to 57 months. In calculating defendant's offense level, Counts V through VIII were grouped pursuant to United States Sentencing Guidelines ("U.S.S.G.") § 3D1.2(d). A base offense level of 6 was given, pursuant to § 2F1.1(a), for crimes involving fraud and deceit. That base offense level was increased, pursuant to § 2F1.1(b)(1), based on the amount of loss involved. The Probation Department calculated the amount of loss at $ 2,208,000, which corresponded to a ten-level enhancement. § 2F1.1(b)(1)(K). Two-level upward adjustments were given for more than minimal planning pursuant to § 2F1.1(b)(2)(A); for defendant's role as organizer, leader, manager or supervisor in the criminal activity, pursuant to § 3B1.1(c); and for obstruction of justice pursuant to § 3C1.1, for a total offense level of 22.

 On February 21, 1992, Mr. Brown filed a statement regarding sentencing factors in which he indicated that it was not possible to set forth whether or not any dispute existed with respect to sentencing factors or facts material to sentencing because he had been unable to discuss the PSR with defendant, his whereabouts being unknown to Mr. Brown. Item No. 67. On March 6, 1992, defendant failed to appear for sentencing. He was ultimately apprehended in the State of Wyoming on May 1, 1992.

 On July 6, 1992, defendant filed a motion for an extension of time to dispute sentencing factors. Item No. 78. The motion incorporated by reference an earlier memorandum of law, dated June 18, 1992, which, in part, addressed defendant's request for an opportunity to object to the PSR. Item No. 74. The government filed an affidavit in opposition. Item No. 77. On July 7, 1992, the Court denied from the bench defendant's motion to file untimely objections to the PSR, finding that defendant had "fled the jurisdiction of his own volition," and had therefore voluntarily waived his right to file objections to the report's factual findings. Nevertheless, the Court gave defendant an opportunity to supplement the record as to the amount of loss suffered by the victim banks.

 On July 28 and 30, 1992, defendant submitted affidavits of himself and Mr. Brown, which focused on the issue of amount of loss. Item Nos. 80, 81. Defendant filed a supplemental affidavit of himself with exhibits on September 3, 1992, Item No. 96, and on September 23, 1992, filed a motion for a hearing on the amount of loss. Item No. 98. The government filed affidavits in opposition to defendant's motion for a hearing and in response to defendant's submissions. Item Nos. 99, 100. On October 16, 1992, defendant filed an amended statement with respect to sentencing factors that noted objections not only to the calculation of loss, but also to the enhancement for obstruction of justice, and the alleged duplication of enhancements for more than minimal planning and role in the offense. Item No. 104.

 The Court filed the October Order on October 30, 1992, denying defendant's motion for a hearing on the amount of loss. The Court ruled that defendant had voluntarily waived his right to file objections to such factual findings of the PSR due to his failure to timely file any such objections. The Court also found that even had defendant not waived his right to object, the Court would have found, based on the affidavit and exhibits submitted by the government, that the amount of loss was in excess of $ 2,000,000. The Court adopted the recommendation of the Probation Department that defendant's offense level be calculated at level 22. Item No. 106.

 On November 4, 1992, defendant filed the instant motion for reconsideration of the October Order, with accompanying memorandum of law. Item Nos. 109, 110. In addition to seeking reconsideration of the waiver issue and objecting to the PSR's calculation of loss, defendant asserts objections to the two-level upward adjustment for obstruction of justice; the two-level upward adjustment for more than minimal planning; the two-level upward adjustment for role in the offense; and the grouping of Counts V and VI with Counts VII and VIII for purposes of sentencing.

 On November 19, 1992, the government filed the affidavits of William P. Hessney, Esq., of Home and City Savings Bank ("Home and City"), and Gary F. Amendola, Esq., from Central Trust Company ("Central Trust"), on the issue of amount of loss. Item Nos. 111, 113. The government also filed an affidavit in opposition to defendant's motion for reconsideration. Item No. 112. Defendant filed a supplemental affirmation and reply memorandum on November 25, 1992. Item Nos. 114, 115.

 The Court heard oral argument on defendant's motion for reconsideration and his factual objections to the PSR on December 10, 1992. Following oral argument, the government was allowed to respond to issues raised by defendant in his reply brief, and on December 24, 1992, filed a supplemental affidavit of Mr. Hessney and a supplemental affidavit in opposition to the motion. Item Nos. 118, 119. The defendant requested and was granted an opportunity to respond to new issues allegedly raised in the government's supplemental affidavit, and filed a supplemental reply brief on December 31, 1992. Item No. 122.

 Such voluminous filings and seven postponements of sentencing over the course of five months, as noted in court records, resulted almost exclusively from defendant's insistence, despite the Court's rulings, that he did not and could not waive the right to file objections to the PSR simply by failing to file them within the time frame established by the Local Guidelines.

 DISCUSSION

 I. Defendant's Waiver of the Right to Raise Factual Objections to the PSR

 Defendant seeks reconsideration of the Court's October Order that, by failing to file objections to the PSR in a timely manner, he waived the right to object. Defendant's arguments are essentially two: (1) that the Local Guidelines are per se unconstitutional because the right to object to factual findings in a PSR cannot be waived simply by failing to timely file such objections; and (2) even if the district court had discretion to set a ten-day filing requirement and provide that failure to comply with it constitutes waiver, defendant's due process rights were violated on the facts of this case because he was not on notice that failure to comply would result in waiver, and because any such waiver was not knowing or voluntary.

 Upon reconsideration, and after reviewing the submissions of the parties and hearing argument from counsel, the Court affirms its prior ruling that defendant's failure to comply with the Local Guidelines constituted a waiver of his right to object to factual findings in the PSR.

 A. Constitutionality of the Local Guidelines

 The authority of district courts to promulgate local procedural rules or guidelines derives from Fed. R. Crim. P. 57, which provides that a district court may make and amend rules governing its practice not inconsistent with the Federal Rules of Criminal Procedure.

 The Local Guidelines, which were sent to defendant and his counsel, provide in relevant part that:

 
3. If a party reasonably disputes sentencing factors or facts material to sentencing, or seeks the inclusion of additional factors or facts material to sentencing in the PSR, it is the obligation of the complaining party to seek administrative resolution of such factors or facts through opposing counsel and the United States Probation Office prior to filing the pleading referenced in paragraph 4. This presentence conference is mandatory except when sentencing factors or facts are not in dispute. No party may file a written objection to the PSR . . . unless he [or she] has conferred with the United States Probation Office and his [or her] opponent in a good faith effort to resolve the disputed matter.
 
4. No later than ten (10) days prior to the sentencing hearing, counsel for the defendant and the Government shall file a pleading entitled, "Statement of Parties With Respect to Sentencing Factors," in accordance with Section 6A1.2 of the Sentencing Guidelines.. . . If a party challenges the findings or factors in the PSR, he [or she] must state with particularity the basis for the objection to the PSR . . . .

 The cover sheet attached to the copy of the Local Guidelines contained a warning in capital letters and bold type:

 
WARNING
 
FAILURE TO COMPLY WITH THE LOCAL PROCEDURAL GUIDELINES MAY RESULT IN THE COURT DECLINING TO CONSIDER ANY OBJECTIONS TO THE APPLICATION OF THE SENTENCING GUIDELINES AS CONTAINED IN THE PRESENTENCE REPORT. YOU HAVE TEN (10) DAYS WITHIN WHICH OBJECTIONS MUST BE MADE KNOWN.

 See Item No. 112, Exhibit A.

 Defendant asserts that the Local Guidelines are in contravention of Fed. R. Crim. P. 32(c)(3)(A) and U.S.S.G. § 6A1.3, such that they are per se unconstitutional. Fed. R. Crim. P. 32(c)(3)(A) provides that:

 
at least 10 days before imposing sentence, unless this minimum is waived by the defendant, the court shall provide the defendant and the defendant's counsel with a copy of the report of the presentence investigation . . . . The court shall afford the defendant and the defendant's counsel an opportunity to comment on the report and, in the discretion of the court, to introduce testimony or other information relating to any alleged factual inaccuracy contained in it.

 Rule 32(c)(3)(D), provides that:

 
if the comments of the defendant and the defendant's counsel or testimony or other information introduced by them allege any factual inaccuracy in the presentence investigation report. . . the court shall, as to each matter controverted, make (i) a finding as to the allegation, or (ii) a determination that no such finding is necessary because the matter controverted will not be taken into account in sentencing.

 The Court finds that the Local Guidelines *fn2" are not in derogation of or inconsistent with Fed. A. Crim. P. 32(c)(3) or U.S.S.G. § 6A1.3, but rather, are a means of ensuring efficient compliance therewith. The Local Guidelines were drafted and adopted by the judges of the Western District of New York on March 1, 1988, based on the recognized need for the court to provide for the efficient resolution and disposition of objections to the PSR such that defendants can be sentenced in a timely manner. The imposition of a ten-day rule for filing such objections is a reasonable procedure devised by the District judges to ensure such goals.

 The Local Guidelines establish a time frame for the exercise of the due process rights recognized in Rule 32(c)(3). To find, as defendant suggests, that failure to comply with the Local Guidelines cannot result in waiver of these rights, would render the Local Guidelines ineffective; enforcement impossible; and non-compliance meaningless. In effect, a defendant could indefinitely put off his or her sentencing by strategically filing factual objections over a period of time. Defendant had the opportunity to present his objections through the regular procedures established by the Local Guidelines in compliance with Fed. R. Crim. P. 32(c)(3)(A). Had he done so, he would have been afforded an opportunity to be heard and the Court would have been required to resolve the objections prior to sentencing. However, because defendant did not place his objections before the Court by timely filing them, the provisions of Rule 32(c)(3) are not applicable. Nevertheless, defendant was, despite the Court's finding of waiver, given an opportunity to supplement the record on his factual objections which, at the time, focused mainly on the issue of amount of loss.

 Defendant cites United States v. Edwards, 945 F.2d 1387, 1404 (7th Cir. 1991), cert. denied, 112 S. Ct. 1590 (1992), in which the Seventh Circuit held that "fleeing the jurisdiction may subject a defendant to a host of additional penalties, but an inadequate amount of time to review a PSR is not one of them." The circuit court ordered that defendant be resentenced and that he be given ten days, pursuant to Rule 32(c)(3)(A), to review the PSR. Defendant here interprets this holding to mean, by ...


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