Appeal from a judgment of the United States District Court for the Southern District of New York, William H. Pauley III, Judge, convicting defendant, following his plea of guilty, of mail fraud, 18 U.S.C. § 1341, and conspiracy to commit mail fraud, federal-program fraud, and wire fraud, 18 U.S.C. § 371; sentencing him principally to 84 months' imprisonment; and ordering him to pay $122,775 in restitution.
The opinion of the court was delivered by: Kearse, Circuit Judge:
Before: KEARSE, MINER, and CHIN, Circuit Judges.
Conviction and custodial sentence affirmed; restitution order vacated and remanded for further proceedings as to amount.
Defendant Efrain Gonzalez, Jr. ("Gonzalez"), a former Senator in
the New York State
Legislature, appeals from a judgment entered in the United States
District Court for the Southern
District of New York following his plea of guilty before William
H. Pauley III, Judge, convicting him
on two counts of mail fraud, in violation of 18 U.S.C. § 1341
(Counts 6 and 8 of the superseding
indictment), one count of conspiracy to commit mail fraud and
federal-program fraud, in violation of
18 U.S.C. § 371 (Count 2), and one count of conspiracy to commit
mail fraud, federal-program fraud,
and wire fraud, in violation of 18 U.S.C. § 371 (Count 3).
Gonzalez was sentenced principally to 84
months' imprisonment, to be followed by a two-year term of
supervised release, and was ordered to
pay $122,775 in restitution. On appeal, he contends principally
that the district court (1) abused its
discretion in denying his motion to withdraw his guilty plea, (2)
erred in calculating the imprisonment
range recommended by the advisory Sentencing Guidelines
("Guidelines"), and (3) erred in ordering
restitution without proof that the persons characterized by the
government as victims were directly
harmed by his offense conduct. For the reasons that follow, we
vacate and remand with respect to the
amount of the restitution order; in all other respects, we
The following description of the conduct underlying the present prosecution is drawn largely from the sentencing findings of the district court, adopting the facts described in the presentence report ("PSR"), to which there was no objection by Gonzalez, and from Gonzalez's statements under oath in pleading guilty to the above offenses.
A. The Mail Fraud and Conspiracy Offenses
Gonzalez was a member of the New York State Senate from 1990 through 2008, representing a district in the Bronx. During all or part of that period, the New York State ("State") Legislature ("Legislature") annually allocated $200 million to certain groups or projects for the public benefit ("public benefit funds"); of that annual total, elected members of the Senate were allowed to designate the recipients of $85 million.
Pathways for Youth, Inc. ("Pathways"), was a not-for-profit
corporation founded with
the stated purpose of helping to improve the lives of young
people. From October 1999 through
January 2005, Gonzalez caused the Legislature to provide more than
$400,000 in public benefit funds
to Pathways. Pathways also received funding from a number of
federal agencies, including the United
States Departments of Health and Human Services, Labor, Education,
and Justice; between October
1999 and July 2004, the total amount of federal funding to
Pathways exceeded $4 million.
West Bronx Neighborhood Association, Inc. ("West Bronx" or
"WBNA"), was a not-
for-profit corporation whose bylaws stated that it was organized
to foster an interest in, inter alia, civic
and community affairs and welfare, and to promote, inter alia,
social and civic responsibility in the
community. Gonzalez, having procured State funds for Pathways,
caused Pathways to provide
funding to West Bronx between 1999 and 2004.
The United Latin American Foundation, Inc. ("ULAF"), was a
corporation whose certificate of incorporation stated that it was
organized to, inter alia, raise funds
for the benefit of residents of the Dominican Republic. Gonzalez
caused Pathways to enter into
consulting agreements with ULAF on ways to strengthen the quality
of life for residents of the Bronx
and northern Manhattan, with respect to, inter alia, housing and
drug problems. ULAF too was a
recipient of funds from Pathways.
1. Moneys From Pathways to West Bronx to
West Bronx, despite the corporate purposes set out in its bylaws,
did not engage in any
substantial amount of not-for-profit activity. Instead, WBNA
funds were used to pay personal
expenses of Gonzalez. Gonzalez was an honorary member of WBNA's
board; WBNA's office
adjoined Gonzalez's District Office in the Bronx; the two offices
shared a common door; and
Gonzalez placed members of his Senate staff in key operating
positions at WBNA.
From October 1999 through January 2005, Gonzalez had the Legislature provide Pathways with $423,000 in funding. From October 1999 through July 2004, Gonzalez caused Pathways to make payments to WBNA totaling $462,500. From about March 1999 through about May 2006, WBNA funds were used to pay more than $400,000 of Gonzalez's personal bills, funding, inter alia, his membership in a vacation club in the Dominican Republic, his rental of a luxury apartment in the Dominican Republic for his wife, his rental of a summer residence in Monroe, New York, college tuition for his daughter, and his purchases of jewelry, apparel, and premium New York Yankees baseball tickets.
2. Moneys From Pathways to ULAF to Gonzalez
ULAF, having entered into consulting agreements with Pathways,
proceeded to send
Pathways reports describing work purportedly done by ULAF personnel
on behalf of Pathways.
Pathways in 2003 paid ULAF a total of $152,500 for the services
described. In fact, ULAF had not
performed any substantial work in connection with the contracts; it
used funds it received from
Pathways to pay personal expenses of Gonzalez and
Miguel Castanos, a former Gonzalez Senate staff employee and an
coconspirator in the present case, was installed as ULAF's
president; ULAF's business address was
Castanos's home address. Other coconspirators became signatories
on ULAF's checking account and
made payments to Castanos, to creditors of Gonzalez, and to
creditors of one of Gonzalez's
3. The Superseding Indictment and Proceedings Toward
Gonzalez was arrested in August 2006. A 10-count superseding
indictment filed in
December 2006 named him in nine counts. He was charged with
substantive counts of federal-
program fraud and mail fraud with regard to West Bronx (Counts 5
and 6) and substantive counts of
federal-program fraud, mail fraud, and wire fraud with regard to
ULAF (Counts 7-9); Gonzalez and
various co-defendants were charged with conspiracy to commit mail
and federal-program fraud with
respect to West Bronx (Count 2) and conspiracy to commit mail,
wire, and federal-program fraud with
respect to ULAF (Count 3). Gonzalez was also charged with
defrauding New York citizens of his
honest services (Count 1), and money laundering conspiracy (Count
4). Each of the defendants
initially pleaded not guilty.
Extensive discovery followed, and, principally for that reason, there were repeated adjournments of the date for trial. Eventually, trial was scheduled for May 4, 2009. In mid-April 2009, Gonzalez's attorney, Murray Richman, asked the district court to, inter alia, postpone the start of trial for one week and to allow Gonzalez to change attorneys. At the ensuing conference with the court, Richman stated as follows:
I know it is late in the game and I hesitate even making this application, but I believe that Mr. Gonzalez is entitled to a trial that he feels he is entitled to. I have been involved in this case from the very beginning. There has been a complete divergence of views on how to handle this case in terms of what the evidence shows, what it doesn't show, how to handle the case. ..
[A]fter his . . . non-election . . . communications seemed to break down.
We have met two times in the last couple of months in order to try to prepare for this case in order to get ready, and we have a different view as to what this evidence is, what the case shows, what counsel can do.
I am in no way impugning my client's integrity. I think it is
honest breakdown in how a case can be handled. He is of the
there is one course of conduct that can be taken and that
establishes his non-
guilt. And I am of the opinion that, frankly speaking, that it
does not. So we
are at a divergence. We can't communicate and we have not
and it is difficult to defend him personally under those
My concern is that I don't want to throw the weight on him. It is easy to do that and it would not be fair, but we are just not getting this thing done.
I recognize, your Honor, this case is an old case and, at this stage, it should have been tried months ago, years ago or whatever. But I am at that position where, if I go forward, I believe that I am involved in an ethical problem.
(Conference Transcript, April 24, 2009 ("Apr. 24, 2009 Conf.Tr."), at 2-4.)
The court rejected the suggestion that the disagreements Richman
himself and Gonzalez constituted a sufficient basis for a change
of attorneys so shortly before trial.
(See id. at 5 ("Mr. Richman, you are a highly experienced and well
qualified lawyer. I am sure that
there are any number of clients with whom you have had a
disagreement over the years about how
to approach a case.").) Noting that the May 4, 2009 trial date had
been set on October 15, 2008, "after
many, many extended adjournments," the court said, "You cannot wait
until the eve of trial to report
to the Court that you are having a difficulty with your client,
especially when you know exactly what
the landscape of this case is." (Id.) The court
We are going to go to trial, and I am not going to relieve you as counsel in the case.
If Mr. Gonzalez wants a trial, he will have one. I will endeavor to
sure that it is as fair a trial as possible, but I am not going to
relieve you as
counsel in this case because we are going to trial, and there is
nothing to indicate that any other lawyer is going to do anything
than what you have done up to this point in time.
The court also addressed Gonzalez directly:
Mr. Gonzalez, are you able to work with your lawyer?
DEFENDANT GONZALEZ: At this time, no, your Honor.
THE COURT: Well, when did that happen?
DEFENDANT GONZALEZ: It happened a couple of months.
THE COURT: Well, I will tell you what. You better start visiting
office and getting ready for trial because this appears to be
nothing more than
an effort to once again delay this trial for months. I can't be
any clearer. Do
Mr. Gonzalez, the reporter cannot take the nod of a head.
DEFENDANT GONZALEZ: Yes, I understand, your Honor.
Richman had also asked the court to move the start of trial from May 4 to May 11. Richman and the government concurred that the trial would be shorter than had originally been 3 anticipated because there would be two fewer defendants (see id. at 7-8)--a reference to the fact that 4 less than a month earlier two of Gonzalez's co-defendants, Castanos and the executive director of 5 Pathways, had entered guilty pleas. The court granted the adjournment request; and, after discussing 6 its planned daily schedule for trial, the court asked Gonzalez whether he would work with Richman; 7 Gonzalez answered, "Yes, your Honor" (id. at 10).
8 B. Gonzalez's Plea of Guilty
9 On May 7, 2009, the government sent Gonzalez an advisory letter in accordance with 10 the suggestion in United States v. Pimentel, 932 F.2d 1029, 1034 (2d Cir. 1991) ("Pimentel letter"), 11 stating the government's view of the likely advisory Guidelines sentencing range for Gonzalez on 12 Counts 2, 3, 6, and 8 of the superseding indictment if Gonzalez were to plead guilty to, and give an 13 appropriate allocution on, those counts. The letter stated that, on the basis of the information then 14 available to the government, the Guidelines-recommended range of imprisonment would be 87-108 15 months.
16 On May 8, Gonzalez, "pursuant to [the] Pimentel letter" (Plea Hearing Transcript, May 17 8, 2009 ("May 2009 Plea Tr."), at 2), moved to withdraw his plea of not guilty and to plead guilty to 18 Counts 2, 3, 6, and 8. Under oath, Gonzalez stated his desire to plead guilty and stated that he was 19 satisfied with Richman's representation of him:
20 THE COURT: Now, Mr. Gonzalez, your attorney has informed me 21 that you wish to enter a plea of guilty. Do you wish to enter a plea of guilty?
THE DEFENDANT: Yes, your Honor.
1 THE COURT: Have you had a full opportunity to discuss your case 2 with your attorney and to discuss the consequences of entering a plea of 3 guilty?
4 THE DEFENDANT: Yes, your Honor.
5 THE COURT: Are you satisfied with your attorney, Mr. Richman, and his representation of you in connection with this matter?
THE DEFENDANT: Yes, your Honor.
The court found: "On the basis of Mr. Gonzalez's responses to my questions and my observations of his demeanor here in my courtroom this afternoon, . . . he's fully competent to enter an informed plea at this time." (Id. at 6.) The court then told Gonzalez that it would describe the 12 constitutional and other rights he would give up by pleading guilty and that the court would ask him 13 questions that were designed to satisfy the court "that you wish to plead guilty because you are guilty 14 and that you fully understand the consequences of your plea"; Gonzalez said he understood. (Id. 15 at 6-7.) After hearing the explanations of those rights, the elements of counts 2, 3, 6, and 8, the 16 maximum possible penalty for each of those counts, and the fact that the sentence to be imposed on 17 him could not yet be determined, Gonzalez said he understood. (See id. at 7-15.) Gonzalez also 18 stated that he understood that he was free to stand trial and not plead guilty:
19 THE COURT: If there were a trial, you would have the right to testify 20 if you wanted to, but no one could force you to testify if you did not want to. 21 Further, no inference or suggestion of guilt could be drawn if you chose 22 not to testify at a trial. Do you understand that, sir?
23 THE DEFENDANT: Yes, your Honor.
24 THE COURT: Do you understand that by entering a plea of guilty 25 today, you're giving up each and every one of the rights that I've described, 26 that you're waiving those rights, and that you'll have no trial?
1 THE DEFENDANT: Yes, your Honor.
2 THE COURT: Do you understand, sir, that you can change your mind 3 right now and refuse to enter a plea of guilty?
4 THE DEFENDANT: Yes, your Honor.
5 THE COURT: You do not have to enter this plea if you do not want 6 to for any reason. Do you understand this fully, Mr. Gonzalez?
7 THE DEFENDANT: Yes, ...