United States v. Bruce Brown

In the

United States Court of Appeals

For the Seventh Circuit

No. 12-3290

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

BRUCE BROWN,

Defendant-Appellant.

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 10 CR 516— Joan Humphrey Lefkow, Judge.

ARGUED DECEMBER 12, 2014 — DECIDED MARCH 3 , 2015

Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.

ROVNER, Circuit Judge. A jury found Bruce Brown guilty of

wire, mail, and bank fraud in connection with a scheme to

defraud mortgage lenders. Brown contends that a prior plea

agreement resolving 2005 money laundering charges against

him barred the government from pursuing charges in the

mortgage fraud scheme, and he contends on that basis the

2 No. 12-3290

district court should have dismissed the indictment in this

case. We affirm.

I.

In 2005, a federal grand jury in Chicago charged Brown

with multiple acts of money laundering. The indictment

alleged that Brown conspired with others to engage in financial

transactions aimed at concealing the proceeds of illegal

narcotics sales, principally through the purchase of luxury cars.

The conspiracy allegedly began in 2002 and ended early in

2005 and involved more than $1.5 million in drug proceeds. In

addition to conspiracy, Brown was charged with seven

substantive acts of money laundering. The case was assigned

to Judge Gottschall.

This was, by the way, Brown’s second indictment in the

Northern District of Illinois. A 2003 indictment had charged

him with multiple acts of income tax evasion. That prosecution

was resolved by way of a written plea agreement pursuant to

which Brown pleaded guilty to one count of filing a false

income tax return. He was sentenced to a five-year term of

probation that included four months of home confinement.

The 2005 money laundering case against Brown largely fell

apart when a key government witness, Kenyatta Coates,

refused to testify against Brown as he had promised the

government he would do. Against the backdrop of a weakened

prosecution case, the parties negotiated a written agreement

pursuant to which Brown committed to plead guilty to one

count of money laundering involving the June 2003 purchase

of a Mercedes Benz automobile by Brown on behalf of Coates.

Brown acknowledged that between $5,000 and $10,000 of the

No. 12-3290 3

$63,000 cash down payment he made on the car constituted the

proceeds of narcotics activity. In exchange for Brown’s agree-

ment to plead guilty to this count and to waive his appellate

rights, the government agreed to dismiss the other charges and

to recommend a sentence of probation and intermittent

confinement within the Sentencing Guidelines advisory range

of four to ten months. The agreement was executed by the

parties on August 21, 2006.

The first page of the plea agreement stated that the agree-

ment “is entirely voluntary and represents the entire agree-

ment between the United States Attorney and defendant

regarding defendant’s criminal liability in case 05 CR 73.”

R. 192 at 2. The charges asserted in that case were set forth on

the next page of the agreement. R. 192 at 3 ¶ 1. Beyond a brief

notation that Brown’s criminal history included his prior

conviction in the 2003 tax case (R. 192 at 5 ¶ 6(e)), there was no

mention in the agreement of any criminal charges other than

those set forth in the 2005 indictment— be they past, present,

anticipated, or under investigation. Elsewhere, the agreement

confirmed that “no threats, promises, or representations have

been made, nor agreements reached, other than those set forth

in this Agreement, to cause defendant to plead guilty.” R. 192

at 11 ¶ 21.

Paragraph 20 of the plea agreement spelled out the

government’s rights in the event that Brown breached the

terms of the agreement. As it is this provision that Brown

believes barred the subsequent mortgage fraud indictment, we

reproduce the paragraph in full here:

4 No. 12-3290

Defendant understands that his compliance with

each part of this Plea Agreement extends through-

out and beyond the period of his sentence, and

failure to abide by any term of the Plea Agreement

is a violation of the Agreement. He further under-

stands that in the event he violates this Agreement,

the government, at its option, may move to vacate

the Plea Agreement, rendering it null and void, and

thereafter prosecute defendant not subject to any of

the limits set forth in this Agreement, or to

resentence defendant. Defendant understands and

agrees that in the event that this Plea Agreement is

breached by defendant, and the Government elects

to void the Plea Agreement and prosecute defen-

dant, any prosecutions that are not time-barred by the

applicable statute of limitations on the date of the signing

of this Agreement may be commenced against defendant

in accordance with this paragraph, notwithstanding the

expiration of the statute of limitations between the

signing of this [A]greement and the commencement

of such prosecutions.

R. 192 at 10-11 ¶ 20 (emphasis ours). As we discuss in greater

detail below, Brown’s argument in this appeal rests on the

italicized language.

When Brown appeared before Judge Gottschall on August

21, 2006 (the same date that he signed the agreement) to

change his plea to guilty, the judge elicited confirmation from

counsel for the government that there were no other agree-

ments other than those set forth in the written plea agreement.

No. 12-3290 5

R. 192 at 21.1 The judge then asked the same question of Brown

himself:

THE COURT: Okay. Now, the lawyers, Mr.

Brown, say that there are no other

agreements. Does that go along

with your understanding?

MR. BROWN: Yes, Your Honor.

THE COURT: Okay. Now, what that means as a

practical matter is that you haven’t

been promised anything about the

sentence. …

R. 192 at 21. After asking counsel to state their understanding

of the calculation of the advisory sentencing range under the

Sentencing Guidelines, and confirming that it comported with

Brown’s understanding, the court again asked Brown whether

there was anything apart from the stated terms of the parties’

agreement that had induced him to plead guilty.

THE COURT: Okay. Now has anyone promised

you anything different, Mr. Brown,

to get you to plead guilty?

MR. BROWN: No, Your Honor.

THE COURT: Has anyone threatened you to try

and get you to plead guilty?

1

The judge actually asked counsel for both parties whether there were any

such agreements, but the transcript reflects a response solely from the

government’s counsel.

6 No. 12-3290

MR. BROWN: No, Your Honor.

R. 192 at 25. After the government briefly outlined the evidence

against Brown as to the one charge to which he was pleading

guilty, and Brown acknowledged the accuracy of the proffer,

the court accepted Brown’s change of plea and entered a

finding of guilty.

Following the preparation of a presentence report by the

probation officer, Brown appeared for sentencing on December

6, 2006. As the probation officer’s Guidelines calculations were

consistent with those of the parties, the advisory Guidelines

range was four to ten months in prison. The court imposed a

sentence of three years’ probation, along with four months of

intermittent confinement, with Brown being credited for the

two and one-half months he had already spent in custody

when he was initially detained in the case. Both the probation

officer and the court expressed doubt at the time as to whether

it would be possible for Brown to serve intermittent confine-

ment in the Northern District of Illinois, and their doubts were

later confirmed. For that reason, the court subsequently

modified Brown’s sentence to waive intermittent confinement.

Around the time that the parties agreed to resolve the

money laundering case, the FBI had begun an investigation

that eventually would culminate in the 2010 charges of

mortgage-related fraud. Brown had eventually been released

on bond while the 2005 money laundering charges were

pending, and it turned out that a house that Brown had posted

as security for that bond was one of a number that had been

purchased pursuant to the scheme we shall describe in a

moment. Brigitte Grose was the owner of this particular house,

No. 12-3290 7

and she had been required to file a quitclaim deed in order to

facilitate its use as security for Brown’s bond. When that house

subsequently went into foreclosure, the government started to

make inquiries. An FBI agent had already interviewed Grose

about the questionable circumstances under which she had

purchased that house (and two others) by the time the parties

signed the plea agreement in the money laundering case. And

Mario Moore, who like Grose was the purchaser of several

houses involved in the scheme, was interviewed not long after

the plea agreement was signed. Both individuals had discussed

Brown’s role in the home purchases; and both of them would

later be named as defendants along with Brown in the 2010

mortgage fraud indictment. So it is fair to say that although no

charges had yet been filed in connection with the mortgage

fraud investigation, the government had some inkling by the

time Brown pleaded guilty in the money laundering case—and

certainly by the time he was sentenced—that he was also

implicated in the mortgage fraud scheme that was under

investigation. But, as we have pointed out, the plea agreement

resolving the money laundering case makes no mention of the

mortgage fraud investigation, and Judge Gottschall said

nothing about that investigation (if she was even aware of it)

when she sentenced Brown.2

2

The record does not make clear whether or to what extent Brown’s

involvement in the mortgage fraud scheme was brought to Judge

Gottschall’s attention. Apparently, both the presentence report and the

probation officer’s confidential sentencing recommendation to the judge

indicated that the FBI case agent had supplied the probation officer with

information regarding additional offenses that Brown allegedly had

(continued...)

8 No. 12-3290

2

(...continued)

committed and which might qualify as relevant conduct vis-à-vis the one

money laundering offense to which Brown had pleaded guilty; the

prosecutor, on the other hand, had informed the probation officer that there

was insufficient evidence to establish that Brown had committed these

additional offenses, even under the lesser burden of proof that governs a

showing of relevant conduct at sentencing. Judge Gottschall likewise noted

at sentencing that the probation officer had been supplied with information

concerning “numerous offenses” of which Brown had not been convicted

but which might qualify as relevant conduct. R. 195 at 4, 6-7. But neither the

judge nor the parties commented on the content of that information, and it

is possible, if not likely, that the information had nothing to do with the

mortgage fraud scheme (which was still being investigated, and which was

distinct in time, participants, and subject matter from the money laundering

scheme), but instead concerned the money laundering charges that the

government had agreed to dismiss. Indeed, the government has represented

that the information recounted in the presentence report concerned only

money laundering offenses. See R. 191 at 6; R. 232 at 3. Neither the

presentence report nor the probation officer’s sentencing recommendation

is a part of the record in this case; nor are those documents part of the

electronic record in the money laundering case. Consequently, we can only

speculate on the nature of the other offenses referred to. The sentencing

transcript, however, gives us no reason to believe that the information

influenced Judge Gottschall’s decision as to the sentence. Her remarks at

sentencing suggest that she was disinclined to consider this information, see

R. 195 at 5 (“I’m going to assume that there is no proof that the defendant

did these things … .”); she made no finding that Brown had committed

additional offenses; and she did, after all order Brown to serve a term of

intermittent confinement (four months) at the low end of the advisory

Guidelines range.

We acknowledge that Brown did seek disclosure of the probation officer’s

confidential sentencing recommendation in order to clarify what additional

offenses were alluded to in that recommendation, a request that the district

court denied. However, because, as we conclude below, there is no

(continued...)

No. 12-3290 9

The mortgage fraud scheme had commenced in or about

May 2005 and lasted for just under a year. Brown’s aim was to

extract money from mortgage loans extended to buyers that he

located. Brown recruited a licensed loan officer, Walker Smith,

to find properties for sale that met the criteria that Brown

specified; Brown took care of finding buyers. Once an appro-

priate property and buyer were located, Brown (with Smith’s

help) falsified documents in order to convince a lender to issue

a mortgage to the buyer. For example, Brown would create

documents indicating that the subject property was being

leased to a tenant at a substantial monthly rent—thus generat-

ing income for the buyer—when in fact the property was not

being leased at all. Or the documentation would indicate that

the buyer intended to live at the property when in fact the

buyer had no such plans. In some instances, the buyer’s rental

history and other financial data were falsified. Brown, who

styled himself as a consultant in these transactions, arranged

to have a “decorating allowance” of $5,000 to $10,000 placed in

the purchase agreement. That money would be distributed to

Brown when the purchase closed, and Brown would split the

amount with the buyer. Brown facilitated a total of six mort-

gage transactions in this manner. The record does not disclose

the total amount of money that he extracted for himself from

2

(...continued)

ambiguity in the money laundering plea agreement that warrants an

inquiry beyond the four corners of that agreement into the parties’

expectations regarding the mortgage fraud charges, there is no need to

explore further what information was referred to in the probation officer’s

sentencing recommendation.

10 No. 12-3290

these transactions. But the scheme involved mortgage proceeds

totaling $1.8 million and inflicted a loss of just over $1 million

on the lenders who financed the mortgages.

In June 2010, a grand jury indicted Brown, among others,

on charges arising out of the mortgage fraud scheme. Brown

was charged with six counts of wire fraud, two counts of mail

fraud, and one count of bank fraud. See 18 U.S.C. §§ 1341, 1343,

1344. The case was assigned to Judge Lefkow and tried to a

jury, which convicted Brown on all charges save for one of the

mail fraud counts that the court dismissed during trial at the

government’s request. Judge Lefkow ordered Brown to serve

a below-Guidelines sentence of 60 months in prison and to

make restitution in the amount of $1.067 million.

Approximately five weeks before the trial began, Brown

asked the court to dismiss the indictment and to continue the

trial date while the motion to dismiss was being briefed.3

Brown contended that the plea agreement in the 2005 money

laundering case barred his prosecution in the 2010 mortgage

fraud case absent his breach of the plea agreement, which had

not occurred. After reviewing the motion and the govern-

ment’s response in opposition (which argued that the money

laundering plea agreement posed no bar to the mortgage fraud

charges), the district court denied Brown’s request for a

postponement of the trial, but allowed Brown to file a reply

brief in support of his motion to dismiss once the trial was

3

Brown simultaneously filed a motion with Judge Gottschall to enforce the

plea agreement in the 2005 money laundering case; she denied that motion

without prejudice. See United States v. Brown, 2012 WL 182214, at *3 n.3

(N.D. Ill. Jan. 20, 2012).

No. 12-3290 11

concluded. Brown filed that brief prior to his sentencing. With

his reply brief, Brown submitted an unsigned affidavit in

which he averred that the Assistant United States Attorney

handling the money laundering prosecution on the govern-

ment’s behalf promised him that if he agreed to plead guilty to

one count of money laundering, “the government would

recommend a sentence of probation with intermittent confine-

ment within the applicable Guidelines range and that would be

the end of all my cases and matter[s] for which the US Attor-

ney was investigating me, including the mortgage cases.”

R. 244-1 at 8 ¶ 23.

The district court denied the motion to dismiss in a written

opinion. United States v. Brown, 2012 WL 182214 (N.D. Ill.

Jan. 20, 2012). The court noted that its analysis focused first on

the written terms of the agreement; there being no need to

consider extrinsic evidence unless the plea agreement was

ambiguous on its face. Id., at *3. The court could find no

explicit immunity provision within the four corners of the

agreement. Id., at *4. Although Brown contended Paragraph 20

contained an implicit promise not to prosecute him for

additional crimes of which it was aware at the time of the

money laundering plea, the court was not convinced that

Paragraph 20 plausibly could be construed to contain such a

promise.

On its face, this clause relates only to the possible

penalty for Brown’s failure to abide by the terms of

the plea agreement. It cannot reasonably be read as

a broad grant of immunity. Indeed, the introductory

paragraphs of the plea agreement make clear that

the agreement relates only to Brown’s “criminal

12 No. 12-3290

liability in case 05 CR 73 [the money laundering

prosecution]” and that the agreement “represents

the entire agreement between the United States

Attorney” and Brown. In addition, the plea agree-

ment does not mention any conduct that relates to

the instant mortgage fraud prosecution. In the

absence of any language in the plea agreement

indicating a promise of immunity to Brown, the

court will not consider the extrinsic evidence sub-

mitted in support of Brown’s motion. From an

objective standpoint, the terms of the money laun-

dering plea agreement do not bar the instant prose-

cution for mortgage fraud.

Id. (citations omitted). The court went on to find no evidence

of bad faith or overreaching on the part of the government that

would otherwise support Brown’s request to dismiss the

indictment. Id. If, as Brown averred in his affidavit, the

government was willing to immunize him for offenses beyond

those covered by the 2005 money laundering indictment, he

was free to negotiate the inclusion of such an agreement in the

plea agreement. Id. As it was, both parties had represented to

Judge Gottschall that there were no agreements other than

those set forth in the written plea agreement. Id. And as the

court had already noted, no such immunity provision could be

found in the terms of the agreement as stated. Id.

II.

We must decide whether the plea agreement between

Brown and the government in the money laundering case

precluded the government from pursuing the fraud charges

No. 12-3290 13

against him in this case. A plea agreement is a contract, and we

interpret its terms using ordinary contract principles, while

being mindful of the defendant’s due process right to funda-

mental fairness in the criminal proceeding that produced the

agreement. E.g., United States v. Smith, 759 F.3d 702, 706 (7th

Cir.), cert. denied, 135 S. Ct. 732 (2014). We examine the terms of

the agreement objectively, relying on the plain meaning of its

terms as evidence of the parties’ intent. See United States v.

Adame-Hernandez, 763 F.3d 818, 827 (7th Cir. 2014); United States

v. Hallahan, 756 F.3d 962, 974 (7th Cir.), cert. denied, 135 S. Ct.

498 (2014); United States v. Alcala, 678 F.3d 574, 577 (7th Cir.

2012). Ambiguities in the contract will be construed against the

government. E.g., id. We will hold the government to any

explicit or implicit promises it has made to the defendant in

exchange for his guilty plea, but the government’s obligations,

like the defendant’s, will be limited to matters on which they

have actually agreed. Hallahan, 756 F.3d at 974; United States v.

Williams, 102 F.3d 923, 927 (7th Cir. 1996); United States v.

Jimenez, 992 F.2d 131, 134 (7th Cir. 1993).

Brown contends that the government induced him to plead

guilty to one count of money laundering in the 2005 case with

the promise to abandon not only the other charges in that case,

but any charges related to the mortgage fraud that it had

begun to investigate. The plea agreement contains no explicit

promise with respect to anything but the money laundering

charges (the agreement provided that the government would

ask the court to dismiss the other charges set forth in the 2005

indictment). But Brown reads Paragraph 20—which states that

in the event of Brown’s breach of the agreement, the govern-

ment would have the right to void the agreement and com-

14 No. 12-3290

mence “any prosecutions that are not time-barred by the

applicable statute of limitations on the date of the signing of

this Agreement”—as an implicit promise not to pursue any

charges arising from the mortgage fraud scheme.

Brown’s reading of that language is far too broad. As Judge

Lefkow pointed out, Paragraph 20 is not an immunity provi-

sion, but a recitation of the government’s rights in the event of

Brown’s failure to abide by the obligations that the agreement

imposed on him. If the right to prosecute Brown for mortgage-

related fraud were something that Brown’s breach would

revive, then one would expect to see elsewhere in the agree-

ment a promise to forgo such claims, just as there was a

promise to dismiss the other money laundering charges in

exchange for Brown’s agreement to plead guilty to one such

charge. There was no such promise.4 Indeed, although the

government had begun to actively investigate the mortgage

fraud scheme by the time the parties came to terms on the

resolution of the money laundering case, there was no refer-

ence anywhere in the agreement to the investigation or to any

criminal charges that might result from that investigation.

There was no mention, in fact, of any potential criminal

liability beyond the parameters of the 2005 prosecution. The

absence of such a reference is consistent with the first page of

the agreement, which states that the agreement “represents the

4

By contrast, when Brown pleaded guilty in the 2003 tax prosecution, see

supra at 2, the plea agreement included the government’s express promise

“not to seek additional income tax charges against the defendant [for acts

within a specified time period] which occurred in the Northern District of

Illinois and which constitute[ ] the defendant’s relevant conduct … .” R. 192

at 59.

No. 12-3290 15

entire agreement between the United States Attorney and

defendant regarding defendant’s criminal liability in case 05 CR

73.” R. 192 at 2 (emphasis ours). In short, the plain terms of the

agreement indicate that it was meant to resolve the money

laundering charges, but not charges related to the govern-

ment’s nascent investigation into the mortgage fraud.

We take Brown’s point that the phrase “any prosecutions”

is expansive when read in isolation. But contractual language

is meant to be read in context, not in the abstract. See, e.g.,

United States v. Ataya, 864 F.2d 1324, 1335-36 (7th Cir. 1988);

Asta, L.L.C. v. Telezygology, Inc., 629 F. Supp. 2d 837, 844 (N.D.

Ill. 2009). In the context of a plea agreement which recites as its

purpose the resolution of Brown’s criminal liability in the

money laundering prosecution, which provides that Brown

will agree to plead guilty to one of the money laundering

charges in the 2005 indictment and waive his appellate rights

in exchange for the government’s agreement to seek dismissal

of the other charges in that indictment, and which provides

that in the event of Brown’s breach of the agreement, the

government would have the right to set the agreement aside

and pursue any “prosecutions” not time-barred at the time the

plea agreement was entered into, “prosecutions” is properly

understood to mean only those charges related to the money

laundering scheme. To read that term to include unrelated

charges that the government had only begun to investigate,

when the balance of the agreement offers no suggestion that

the parties intended to resolve anything beyond the money

laundering case itself, amounts to an unreasonable construc-

tion of Paragraph 20. The objective meaning of Paragraph 20

and the balance of the plea agreement is plain, and there was

16 No. 12-3290

no promise to abandon charges related to the mortgage fraud

scheme.

Apart from the terms of the written agreement, Brown’s

affidavit, as we have noted, avers that the prosecutor handling

the money laundering case made an explicit oral promise to

him that the government would drop any mortgage fraud

charges as well as the balance of the money laundering charges

in exchange for his guilty plea to the single money laundering

charge. In Brown’s words, “that would be the end of all my

cases and matter[s] for which the US Attorney was investigat-

ing me, including the mortgage cases.” R. 244-1 at 8 ¶ 23. At

that point, as Brown recalls it, the prosecutor presented him

with the written plea agreement and he signed it. Id. Whether

as extrinsic evidence of what Paragraph 20 of the plea agree-

ment means, or as evidence of bad faith or overreaching by the

government, the affidavit does not support Brown’s contention

that an evidentiary hearing is necessary to establish exactly

what the government promised him in exchange for his plea.

The affidavit is unsigned and thus unsworn, which de-

prives it of value as actual evidence. See Sellers v. Henman,

41 F.3d 1100, 1101, 1102 (7th Cir. 1994); DeBruyne v. Equitable

Life Assur. Soc. of U.S., 920 F.2d 457, 471 (7th Cir. 1990); Pfeil v.

Rogers, 757 F.2d 850, 859 (7th Cir. 1985). We may instead treat

it as a proffer of what Brown would testify if an evidentiary

hearing were convened. But even in that role the affidavit fails

to establish the need for further inquiry.

There is no ambiguity in the plea agreement which war-

rants the presentation of extrinsic evidence. See, e.g., United

States v. Kingcade, 562 F.3d 794, 797 (7th Cir. 2009). Whatever

No. 12-3290 17

question use of the phrase “any prosecutions” in Paragraph 20

might raise is answered, as we have discussed, by the remain-

der of the agreement, which makes no mention of potential

charges related to the mortgage fraud investigation and

affirmatively indicates that the agreement was meant to

resolve the money laundering case alone. In short, nothing in

the agreement reflects a promise by the government not to

pursue the charges later advanced in the 2010 indictment.

Brown’s affidavit thus posits the existence of a contractual

provision beyond those incorporated into the written terms of

the plea agreement. Yet the agreement itself states that it

represents the entirety of the parties’ agreement, and not only

the government, but Brown himself, assured Judge Gottschall

at the change-of-plea hearing that no other promises had been

made to Brown in order to induce him to plead guilty. Brown’s

affidavit is thus in direct contradiction to what he represented

to the court, and what Judge Gottschall relied upon, in evaluat-

ing and accepting his guilty plea. Avoiding after-the-fact

accusations that an undocumented agreement has been

breached is exactly why judges ask the parties to confirm that

there are no agreements beyond those committed to writing or

otherwise recited in open court. Treating Brown’s affidavit as

sufficient to commence an inquiry would undermine the

interests in candor and finality served by the court’s inquiry

into undisclosed promises.

We note, finally, that Brown was represented by counsel

when he signed the plea agreement and pleaded guilty to the

money laundering charge. If, as Brown now represents, the

government indeed had promised not to charge Brown in

connection with the mortgage fraud it was investigating,

18 No. 12-3290

Brown’s counsel no doubt would have made sure that promise

was placed on the record.

III.

For all of the foregoing reasons, the district court correctly

denied Brown’s motion to dismiss the indictment. Brown has

not shown that the charges in this case were barred by his plea

agreement in the 2005 money laundering prosecution.

AFFIRMED