United States v. Howe

Opinions of the United

2008 Decisions States Court of Appeals

for the Third Circuit

9-18-2008

USA v. Howe

Precedential or Non-Precedential: Precedential

Docket No. 07-1404

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2008

Recommended Citation

"USA v. Howe" (2008). 2008 Decisions. Paper 440.

http://digitalcommons.law.villanova.edu/thirdcircuit_2008/440

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2008 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 07-1404

UNITED STATES OF AMERICA,

Appellant

v.

MALCOLM G. HOWE

On Appeal from the United States District Court

for the District of Delaware

(D.C. No. 04-cr-00085)

District Judge: Honorable Gregory M. Sleet

Argued June 3, 2008

Before: FISHER and JORDAN, Circuit Judges,

and YOHN,* District Judge.

*

The Honorable William H. Yohn Jr., United States

District Judge for the Eastern District of Pennsylvania, sitting by

designation.

(Filed: September 18, 2008)

Christopher J. Burke (Argued)

David L. Hall

Office of United States Attorney

1007 North Orange Street, Suite 700

P.O. Box 2046

Wilmington, DE 19899

Attorneys for Appellant

Kathleen M. Jennings (Argued)

William J. Rhodunda, Jr.

Karen V. Sullivan

WolfBlock

1100 North Market, Suite 1001

Wilmington, DE 19801

Attorneys for Appellee

OPINION OF THE COURT

FISHER, Circuit Judge.

In this appeal we review the sentence imposed on a

defendant who was convicted of two counts of wire fraud. The

sentence consisted of two years’ probation (including three

months’ home confinement), despite an advisory Sentencing

Guidelines range of 18 to 24 months’ imprisonment. The

District Court imposed no fine and no forfeiture (other than the

2

special assessment of $200). The Government appeals from the

District Court’s judgment of sentence. We will affirm.

I.

A. The Offense

After retiring from the United States Air Force, where he

served as a contracting officer, Malcolm G. Howe founded and

operated Elite International Traders, Inc. (Elite). Elite was in

the business of supplying goods to the United States Armed

Forces under written contract. Typically, Elite acted as a

“middle man,” purchasing the contracted goods from a

manufacturer and delivering them to the military customer.

Elite would then invoice the Defense Finance and Accounting

Service (DFAS) for payment.

On September 27, 2000, Elite contracted with the Air

Force to supply twenty embeddable computer encryption

modules for $152,850. These devices are used to encrypt

national security information transmitted among networked

military computers. The devices in this case were destined for

the United States Air Force Base at Ali Al Salem in Kuwait.

Under the terms of the contract, Howe was to obtain the devices

and deliver them to Dover Air Force Base in Delaware for

military transport to Ali Al Salem Air Force Base.

To obtain payment on the contract, Elite was required to

submit to DFAS proof of delivery to Dover Air Force Base. In

fact, Howe (on behalf of Elite) never purchased or delivered the

devices, but he still submitted or caused to be submitted to

3

DFAS an altered straight bill of lading1 on January 22, 2001,

falsely indicating that the devices had been delivered. Four days

later, in reliance on the altered straight bill of lading, DFAS paid

Elite $152,850.

When Ali Al Salem Air Force Base discovered that the

devices had not arrived, the Air Force initiated an investigation

to locate them. Howe then engaged in a sustained effort to

obstruct the investigation in order to hide his crime. For

example, in July 2002, Howe generated false invoices to create

the impression that Elite had reimbursed a foreign company

named Abdullah Trading for the purchase of the encryption

modules. (Abdullah Trading ultimately paid $152,850 in

restitution to the Department of Defense on Howe’s behalf.)

Howe backdated the invoices to January 10, 2001, conforming

them to the date he falsely claimed to have delivered the

contracted devices. The Air Force never found them and

referred the case for law enforcement investigation. During the

subsequent investigation, Howe continued to make several

untruthful statements regarding the purported transaction.

On January 8, 2003, Howe’s home and business were

searched pursuant to a search warrant, and Howe consented to

an interview with the investigating agents. Howe made further

inconsistent and questionable statements during the interview.

For example, Howe stated, for the first time in the two-year

investigation, that the handwriting on the January 2001 altered

1

A straight bill of lading is a nonnegotiable bill of lading

that specifies a consignee to whom the carrier is contractually

obligated to deliver the goods.

4

bill of lading belonged to the owner of Abdullah Trading rather

than himself.

B. The Trial

On August 24, 2004, the Government filed an indictment

against Howe containing two counts of wire fraud, in violation

of 18 U.S.C. §§ 2 and 1343. Count I targeted the Elite invoice

in the amount of $152,850 and the altered straight bill of lading,

while Count II targeted an electronic funds transfer of $152,850

from a Massachusetts bank to a Delaware bank. Trial

commenced on September 11, 2006. At trial, Howe stated again

that he believed that the contract was being handled by Abdullah

Trading. The jury found Howe guilty on both counts on

September 14, 2006.

C. The Sentence

Counts I and II were grouped together for Guidelines

calculations purposes under Guidelines § 3D1.2(d).2 The base

offense level was 6 under § 2F1.1(a). The amount of loss of

$152,850 resulted in 7 levels added under § 2F1.1(b)(1)(H).

Two more levels were added to reflect more than minimal

planning under § 2F1.1(b)(2)(A), resulting in an adjusted

offense level of 15. There were no Chapter Four enhancements,

nor were there downward adjustments for acceptance of

responsibility under Chapter Three of the Guidelines. At the

December 12, 2006 sentencing hearing, the District Court

2

The District Court used the 2000 edition of the

Guidelines manual, and we will do the same.

5

therefore assigned Howe a Guidelines total offense level of 15

and a Criminal History Category of I. The corresponding

advisory Guidelines range was 18 to 24 months’ incarceration,

along with a $4,000 to $40,000 fine under § 5E1.2(c)(3).

The Government recommended a sentence of 18 months,

arguing that “Mr. Howe utilized his knowledge of the

contracting process, utilized his knowledge of the fast pay

system in particular, in order to take advantage of that system.

He found a weakness and he exploited it. After doing that, he

lied about it for years.” The District Court, however, decided to

vary downward from the bottom of the Guidelines to sentence

Howe to two years’ probation with three months’ home

confinement, to be served concurrently at each count. It also

declined to impose any fine. The District Court provided the

following justification for this sentence:

“Mr. Howe, after having considered the

provisions of the United States Sentencing

Guidelines, the advisory Guideline range, the

Supreme Court’s ruling in United States versus

Booker, the sentencing factors outlined in Title

18, Section 3553(a), and the underlying goals of

sentencing, most of which have been mentioned

by you and your counsel and [the] AUSA . . . ,

including punishment, deterrence, rehabilitation,

respect for the law, I am sentencing you to

probation. This sentence reflects the Court’s view

that, under the totality of the circumstances

involved, a sentence of probation rather than a

period of incarceration better serves the interests

6

of justice, as that term is applied to the societal

interest in sentencing reflected in Section 3553(a)

and various rulings of our Supreme Court and

various courts of appeals.

The Court feels this sentence is appropriate

for several reasons.

First, Mr. Howe, the Court recognizes that

this is an isolated mistake, by all accounts, albeit

an extraordinarily serious one. Mr. [AUSA] has

not overreached at all in his description of the

nature of the offense and the calculated nature of

the offense, and the taking advantage of special

knowledge that you possessed and to which you

came to possess during the course of your service.

But by all accounts, you have led an

honorable and lawful life until this point, as

attested by the many, more than 40 character

letters that I received and read.

You have no prior criminal history, nor

any history of substance abuse of any kind, as

best I can tell. You have served in the U.S.

Military for 20 years and were honorably

discharged with the rank of Master Sergeant.

Further, you are a well-regarded member

of your community. This is further evidenced by

the many letters, many, many letters from

7

non-relatives, people whom you served,

high-ranking officers and others, members of the

clergy, and just regular folks who wrote on your

behalf.

You regularly attend church and participate

in church activities.

The Court also understands that running

your own business is difficult and can produce

financial hardships. But this is in no way an

excuse or to minimize, again, the seriousness of

your acts. However, the Court believes you

recognize the serious[] nature of the offense and

are truly remorseful, as I think was

well-evidenced by your statement, which I felt,

quite frankly, was heartfelt today. This is also

demonstrated by the fact that you immediately

closed your business and seemed to be honestly

committed to exploring new opportunities to

provide for your family in a manner which, quite

frankly, I think over the years has been quite

extraordinary, quite extraordinary, your

immediate family and your extended family, and

those who were not blood relations.

It should be noted that you are a devoted

husband, father, and son.

The Court recognizes that this process has

been difficult for your family, and is encouraged

8

by the support that it saw in the letters and sees

today out in the well of the court by virtue of the

attendance of many individuals whom I think I

assume rightly are connected with you in some

way. The Court hopes you will remember this

experience so if you are again faced with a

decision of this sort, the one that brings you

before me today, that you will in the future

choose more wisely.”

The Government then filed a timely notice of appeal from the

sentence.

II.

We have jurisdiction to review the District Court’s

judgment of sentence under 18 U.S.C. § 3742(b). United States

v. Kononchuk, 485 F.3d 199, 203 & n.2 (3d Cir. 2007). We

review the sentence imposed for reasonableness. The

Government, as the appellant in this case, bears the burden of

establishing that the sentence is unreasonable. United States v.

Cooper, 437 F.3d 324, 332 (3d Cir. 2006). In conducting our

review, we must first ensure that the District Court committed

no significant procedural error in arriving at its decision. United

States v. Wise, 515 F.3d 207, 217 (3d Cir. 2008). “If we

determine that the district court has committed no significant

procedural error, we then review the substantive reasonableness

of the sentence under an abuse-of-discretion standard, regardless

of whether it falls within the Guidelines range.” Id. at 218.

9

A.

We first examine the Government’s argument that the

District Court committed procedural error in sentencing Howe.

We find no merit in this contention. The Supreme Court

instructs us to “ensure that the district court committed no

significant procedural error, such as failing to calculate (or

improperly calculating) the Guidelines range, treating the

Guidelines as mandatory, failing to consider the § 3553(a)

factors, selecting a sentence based on clearly erroneous facts, or

failing to adequately explain the chosen sentence – including an

explanation for any deviation from the Guidelines range.” Gall

v. United States, 128 S. Ct. 586, 597 (2007).

Here, the Government does not argue that the District

Court miscalculated or failed to calculate Howe’s Guidelines

range. Nor does the Government argue that the District Court

treated the Guidelines as mandatory. Instead, the Government

argues that the Court selected a sentence based on two clearly

erroneous factual findings: first, that Howe committed a crime

that was an “isolated mistake”; and second, that Howe was

remorseful. “A finding is clearly erroneous when although there

is evidence to support it, the reviewing body on the entire

evidence is left with the definite and firm conviction that a

mistake has been committed.” Wise, 515 F.3d at 218 (quoting

Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers

Pension Trust for S. Cal., 508 U.S. 602, 622 (1993)). We are

not left with such a definite and firm conviction in this case with

respect to either of the two contested factual findings.

10

First, it was not clear error for the District Court to find

that Howe made but an “isolated mistake” in perpetrating his

crime. The Government argues that Howe’s mistake could be

characterized as isolated “only if it is possible for a two-year

campaign to cover up a $152,850 fraud against the Air Force to

be considered ‘isolated.’” Yet, the District Court’s words could

just as easily be taken to mean that Howe’s crime was isolated

in the context of his entire life. Read this way, the District

Court’s finding is amply supported by the record. Indeed,

Howe’s dishonesty and obstruction stemmed entirely from his

initial offense of using a false bill of lading as proof of delivery

to exploit the contract payment process. In the context of

Howe’s entire life, this series of events reasonably could

constitute an isolated mistake. Howe might be less blameworthy

had he withdrawn from the fraud at an earlier point during the

two-year period. But where there is no dispute that Howe “led

an honorable and lawful life until this point,” the District Court

did not commit clear error in characterizing what he did as an

isolated mistake. Any other result here would force district

courts to choose their words so meticulously at sentencing

hearings as to elevate form over substance.

Second, the Government argues that the District Court

clearly erred in finding that Howe was remorseful. The

Government bases this argument primarily on “[t]he fact that

Howe went to trial. . . . At trial, Howe specifically denied the

element of intent to defraud and sought, through counsel, to

blame an uncharged third party . . . .” But this argument about

Howe’s defense at trial has nothing to do with what the District

Court observed at the sentencing hearing.

11

In finding that Howe showed genuine remorse at

sentencing, the District Court did not err at all, let alone clearly

err. Indeed, Howe stated in his allocution:

“It is with deep remorse that I say these words.

I sincerely apologize to the U.S.

Government and the United States Air Force for

the loss they sustained because of my actions

associated with this case.

I would also like to publicly apologize to

my family for the pain and agony they have

endured throughout this ordeal.

I proudly say that I love this country. This

country has given me the opportunity to live a

dream, a dream that allows me to provide quality

of life for my family that I could not have

afforded had I stayed in my home country of

Trinidad.

I look back on the 20 years I spent in the

Air Force as a special privilege, because I was

able to serve this country by benefitting in so

many other ways. It was my intention to continue

to serve this country while providing for my

family, which is why I decided to go into the

business of supplying commodities to all forces in

the Middle East after my retirement from active

duty.

12

I never intended to steal from the

government or cause harm to the U.S. Air Force.

I have strong regrets for allowing myself to be

sucked into this fraudulent scheme for which I am

now convicted.

The Court declared me guilty on the 14th

of December [he meant September 2006]. I have

been carrying the weight of guilt of selfish and

incorrect acts since January of 2001, the

knowledge of my involvement in this senseless

crime or varied reactions from family and friends,

shame, anger, disappointment, disbelief, surprise,

sympathy, tears of pain and forgiveness.

Over the past few years I have done a lot

of soul-searching. I have asked myself why am I

in this predicament, after spending my entire life

helping others and building a character of

trustworthiness, integrity and love for all? The

key reason I can find is that the Lord wanted to

create a better person of me.

This has been a life-changing experience

for me. But not just for me, but for my family and

my friends. As a result of this experience, I have

grown spiritually and developed an even closer

relationship with my family. For this, I am

extremely grateful.

13

I am now faced with making amends for

my poor judgment. And though I am prepared to

accept the Court’s decision, Your Honor, I

humbly ask that you afford me the opportunity to

pay back the losses by assisting my community,

thereby eliminating any further burden on my

family.

Once again, I am deeply sorry for not

doing the right thing when I had the opportunity

to do so.

Thank you.”

These words on the written page may or may not evoke

a belief in their sincerity. The Government parses them in

attempting to construct an image of lack of sincerity. It argues:

“Howe’s statement to the district court, far from being a sincere

statement of contrition, is a classic example of a defendant

dissembling. He did use the word ‘remorse.’ But rather than

expressing remorse for his sustained criminal conduct, he

expressed ‘deep remorse that I say these words.’” Similarly,

according to the Government, Howe expressed “regrets” only

“for allowing myself to be sucked into this fraudulent scheme

for which I am now convicted.” So, under the Government’s

theory, Howe’s “remorse” and “regrets” show just how sneaky

he really is: his only real regret is that he was caught.

The problem with all this parsing is that it would require

us to overrule the District Court’s first-hand observation of

Howe’s allocution based on our own post hoc reading of the

14

record. But the task of discerning sincerity lies squarely with

the district judge, who observes first-hand the words as they are

communicated live. See United States v. McIntosh, 198 F.3d

995, 1001 (7th Cir. 2000) (“[T]he district court has a

responsibility to look at the whole picture when making its

determination of whether a defendant has genuine remorse. In

determining a defendant’s sincerity, the district court has an

opportunity to observe a defendant ‘firsthand’ during the course

of a criminal case.”); see also Gall, 128 S. Ct. at 597-98 (“The

sentencing judge has access to, and greater familiarity with, the

individual case and the individual defendant before him than the

[Sentencing] Commission or the appeals court.” (quoting Rita v.

United States, 127 S. Ct. 2456, 2469 (2007))). The Supreme

Court in Gall also reiterated that “[t]he sentencing judge is in a

superior position to find facts and judge their import under

§ 3553(a) in the individual case. The judge sees and hears the

evidence, makes credibility determinations, has full knowledge

of the facts and gains insights not conveyed by the record.” 128

S. Ct. at 597 (citation omitted). What the district judge observes

at the sentencing hearing may therefore unquestionably be taken

into account as part of his “credibility determinations” and

“insights not conveyed by the record.”

In the case at bar, after hearing Howe’s allocution, the

District Court explained:

“I couldn’t disagree with you more, Mr. [AUSA],

in the statement that he just read to the Court. . . .

I heard that acceptance [of responsibility]

at various times through Mr. Howe’s recitation.

15

Reasonable people might be able to disagree on

this. I don’t really think so. I am not saying you

are being unreasonable, Mr. [AUSA]. But my

recollection is that he has accepted responsibility

in that statement. I agree with you that his lawyer

said that you can attribute to him, but you said

what he said. What I heard him to say today I

would characterize as an acceptance of

responsibility. Simple as that. . . .

I have heard equivocation from that

podium on many occasions throughout the almost

nine years that I have been doing this, in countless

sentencings over which I have presided. That was

not equivocation on the issue of acceptance of

responsibility that I heard from this gentleman.”

While Howe’s statement might plausibly be read as insincere,

we are not left with a firm and definite conviction that it must be

read as such. Obviously, were the District Court’s factual

finding in clear contradiction with what Howe actually said, we

would find clear error. But we do not have that here, where

Howe’s entire statement is laden with his acknowledgment of

“poor judgment” and “weight of guilt of selfish and incorrect

acts,” for which he “publicly apologize[d]” and the

rehabilitation for which he was “extremely grateful.”

As for the Government’s emphasis on Howe’s statement

that he “never intended to steal from the government or cause

harm to the U.S. Air Force,” while there are cases that state that

a district court’s finding of no intent at sentencing is clearly

16

erroneous where intent is an element of the convicted offense,

in this case the District Court made no such finding. Instead, it

was Howe who said as part of his allocution that he did not

intend to defraud – all the District Court found was that Howe

showed remorse. Howe’s statement that he did not intend to

steal from the government is plausibly a piece of that remorse.

Lay people reasonably could use the word “intend” to mean

something other than the element of a crime; in context, then,

the District Court did not commit clear error in interpreting that

Howe, in mentioning his lack of “intent,” was not denying the

guilt of his convicted offense.

The Government also argues that the District Court did

not adequately consider general deterrence, § 3553(a)(2)(B), in

this case. There are indeed situations in which a district court’s

failure to adequately explain its rejection of a legally recognized

sentencing factor would amount to a “significant procedural

error” under Gall. See 128 S. Ct. at 597 (significant procedural

error includes “failing to adequately explain the chosen sentence

– including an explanation for any deviation from the Guidelines

range”); see also United States v. Sevilla, --- F.3d ----,

No. 07-1105, 2008 WL 4069453, at *4 (3d Cir. Sept. 4, 2008)

(failure to respond to defendant’s “colorable arguments relating

to his childhood and the crack/powder disparity other than to say

that it had ‘considered all of the [§] 3553(a) factors’” constituted

procedural error requiring remand); Kononchuk, 485 F.3d at

204-05 (“when the objections have legal merit, the

considerations countervailing the district court’s judgment are

significant and worthy of response”).

17

But Sevilla and Kononchuk are readily distinguishable on

their facts. In Sevilla, the defendant-appellant had raised his

legally recognized grounds for downward variance in a written

sentencing memorandum prior to the sentencing hearing. ---

F.3d at ----, 2008 WL 4069453, at *1. In Kononchuk, the

government-appellant at the sentencing hearing had gone to

great lengths to “emphasize[] the sophistication and

deliberateness of Kononchuk’s scheme, as well as the need for

consistency in punishment between like offenders. . . . The

government objected strenuously to what it saw as the District

Court’s willingness to allow someone to avoid a sentence of

imprisonment simply because he had the financial capability to

pay restitution . . . .” 485 F.3d at 202. Yet, the district court in

that case “did not explain what warranted the disparity in

treatment between” two similarly situated defendants, id. at 205,

nor did it adequately explain why it “favor[ed] the restitution

aspect of punishment over the incarceration aspect.” Id. at 206.

By contrast, the record in this case reveals that the

colloquy between the Government and the District Court

focused mostly on the degree of remorse exhibited by Howe,

rather than the importance of general deterrence. The only time

the Government said anything about general deterrence was its

statement that “the Court is required under [§] 3553(a) to

consider . . . , among other objectives, . . . deterrence in the

community at large.” This hardly qualifies as a “strenuous

objection.” Nor did the Government file a written sentencing

memorandum prior to the sentencing hearing. The District

Court’s response in this case, therefore, need not have gone

beyond its mention of “deterrence” in its statement of reasons.

See United States v. Ausburn, 502 F.3d 313, 328-29 (3d Cir.

18

2007) (“a rote statement of the § 3553(a) factors will not always

be either necessary or sufficient to satisfy the requirements of

reasonableness” (internal quotation marks and comma omitted)).

A contrary result in this case would ignore our equally well-

established precedent that a district court is “not required to

comment explicitly on every § 3553(a) factor because ‘the

record makes clear the court took the factors into account in

sentencing.’” United States v. Parker, 462 F.3d 273, 278 (3d

Cir. 2006) (quoting Cooper, 437 F.3d at 239). We are thus

satisfied in this case that the District Court adequately

considered general deterrence in its statement of reasons.

In this case, then, the Government cannot plausibly argue

that the District Court’s lengthy explanation of Howe’s history

and characteristics, combined with its acknowledgment that

Howe committed an “extraordinarily serious” offense, did not

constitute an adequate explanation of the ultimate sentence.

Further, we save for our substantive review the Government’s

alternative argument that the District Court should have given

more weight to general deterrence, so much so that an adequate

consideration of that one factor should have trumped any

mitigating factors in the final sentence. The line between

procedural and substantive error may sometimes be unclear, but

here, the Government’s argument about which sentencing

factors should trump which other factors belongs in the prism of

substantive review. In sum, none of the Government’s

contentions amount to “significant procedural error” under Gall.

19

B.

Nor is the District Court’s sentence substantively

unreasonable. The Government argues that the factors upon

which the District Court relied – even assuming they are not

clearly erroneous as a factual matter – are not unusual enough

to warrant as significant a downward variance as that granted by

the District Court.3 See Br. at 19-20 (“Defendants, particularly

those with no prior criminal history, routinely allege positive

attributes at sentencing, including past military service, family

devotion, a good reputation in the community, and church

attendance.”).

The Government cites United States v. Tomko, 498 F.3d

157 (3d Cir. 2007), to support its position. But we vacated that

opinion, 513 F.3d 360 (3d Cir. 2008), and the case’s ultimate

disposition remains pending. --- F.3d ----, No. 05-4997, 2008

WL 3850081 (3d Cir. Aug. 19, 2008). Even assuming that

portions of the Tomko panel opinion state good law, the facts in

this case are plainly distinguishable.

Here, the District Court relied on no fewer than seven

reasons to justify its downward variance: (1) Howe “led an

honorable and lawful life until this point” and had no prior

criminal history; (2) Howe “served in the U.S. Military for 20

3

Our Court distinguishes between traditional departures

based on a specific Guidelines provision and sentencing

“variances” from the Guidelines based on the § 3553(a) factors.

United States v. Vampire Nation, 451 F.3d 189, 195 n.2 (3d Cir.

2006).

20

years”; (3) Howe was a “well-regarded member of [his]

community”; (4) Howe “regularly attend[s] church”; (5) Howe

was a “devoted husband, father, and son”; (6) Howe made but

an “isolated mistake” in committing his crime; and (7) Howe

was remorseful at sentencing. The Government attacks a

number of these findings as insufficient to support the variance.

We remind the Government, however, that we must conduct our

substantive review by “tak[ing] into account the totality of the

circumstances.” Gall, 128 S. Ct. at 597.

For example, the Government argues that the District

Court was inconsistent in not granting a downward departure

based on acceptance of responsibility, yet granting a downward

variance in part because of Howe’s remorse. But there is no

inconsistency. With respect to a downward departure under

Guidelines § 3E1.1, Application Note 2 provides:

“This adjustment is not intended to apply to a

defendant who puts the government to its burden

of proof at trial by denying the essential factual

elements of guilt, is convicted, and only then

admits guilt and expresses remorse. Conviction

by trial, however, does not automatically preclude

a defendant from consideration for such a

reduction. . . . In each such instance, however, a

determination that a defendant has accepted

responsibility will be based primarily upon pre-

trial statements and conduct.”

The Government cites Application Note 2 to argue that Howe’s

“sentencing allocution, even if it had been sincere, was not

21

sufficient to overcome the fact that he had denied his guilt and

gone to trial.”

This argument might have merit under the Guidelines,

but it is without merit with respect to a non-Guidelines variance.

See United States v. Smith, 445 F.3d 1, 5 (1st Cir. 2006) (“That

a factor is discouraged or forbidden under the guidelines does

not automatically make it irrelevant when a court is weighing

the statutory factors apart from the guidelines.”). Indeed, a

defendant’s degree of remorse at sentencing may be considered

as a basis for downward variance under § 3553(a) regardless of

whether the defendant previously accepted responsibility. See,

e.g., United States v. Todd, 515 F.3d 1128, 1134 n.3 (10th Cir.

2008).

In fact, if, even after a guilty plea, a defendant’s

demeanor at sentencing is unremorseful, the district court may

properly deny an acceptance of responsibility reduction under

the Guidelines. E.g., United States v. Lim, 235 F.3d 382, 385

(8th Cir. 2000). Surely in a case like Lim, the Government

would not argue that it was inconsistent for the district court to

accept the defendant’s guilty plea on the one hand, yet reject his

motion for a downward departure on the other. Likewise, there

is no inconsistency between the District Court’s denial of an

acceptance of responsibility departure based on Howe’s denial

of guilt at trial and its subsequent downward variance based in

part on Howe’s remorseful demeanor at sentencing.

The Government also avers that remorse should not

support a downward variance under § 3553(a) because it reflects

a characteristic that most defendants, white-collar or otherwise,

22

exhibit at sentencing. This averment is inaccurate. See, e.g.,

Lim, 235 F.3d at 385 (in mail fraud case, defendant at

sentencing “acts as if he ought to be given a medal for what he’s

done here. He has absolutely no remorse for what he’s done,

none.”); United States v. Brown, 147 F.3d 477, 486 (6th Cir.

1998) (in mail and wire fraud case, defendant “showed no

remorse and did not think he did anything wrong”); United

States v. Young, 132 F.3d 44 (10th Cir. 1997) (in mail of threats

case, “although [defendant] admitted committing the crimes and

pled guilty, she showed no remorse”); United States v. Castner,

50 F.3d 1267, 1280 (4th Cir. 1995) (in mail fraud case,

defendants “showed no remorse whatsoever for blatantly

cheating the United States Government out of in excess of

$50,000.” (internal quotation marks and alterations omitted)).

Therefore, Howe’s remorse at sentencing is a factor that may

distinguish him from the universe of white-collar offenders.

Nor did Howe’s remorse have to be extraordinary. See

Gall, 128 S. Ct. at 595 (“We reject . . . an appellate rule that

requires ‘extraordinary’ circumstances to justify a sentence

outside the Guidelines range.”). We acknowledge that

defendants can easily put on an act at sentencing, feigning

remorse, when in fact they are not remorseful at all, especially

when they have shown no remorse until the day of sentencing.

But, for reasons we have already articulated, we will not

categorically prohibit a district court from taking a defendant’s

demeanor at sentencing into account. We therefore continue to

permit the district court to discern, as part of its credibility

determinations, the level of sincerity of a defendant’s remorse.

So long as there is no clear error in these determinations and

hence no significant procedural error, we will not vacate a

23

sentence as substantively unreasonable simply because it is

based on them to some extent.

In any event, remorse is not the only basis for the

variance in this case. Another justification was Howe’s twenty

years of military service followed by honorable discharge. The

Government brushes that justification aside with the conclusory

averment that this factor does “not meaningfully distinguish

Howe from other defendants . . . .” But the Government cites no

evidence that most defendants, white-collar or otherwise, in fact

have lengthy and positive records of past military service,

whereas it is the Government as appellant whose burden it is to

establish that a sentencing factor is unreasonable. Further, the

argument that any military service must be “exceptional” is not

suitable to our review of a district court’s analysis under

§ 3553(a).

Indeed, the Supreme Court included military service as

a reason to affirm the district court’s below-Guidelines sentence

in Kimbrough v. United States, 128 S. Ct. 558, 575 (2007) (“he

had served in combat during Operation Desert Storm and

received an honorable discharge from the Marine Corps, and

that he had a steady history of employment”). While this

consideration alone might not be enough to warrant the

downward variance to probation in this case, Kimbrough makes

clear that it may be considered as one of the factors. The

offender-specific characteristics of remorse and military service,

especially when combined with the five other factual findings

supporting variance listed above, none of which the Government

24

claims may not factor into the District Court’s decisionmaking,4

could therefore support the Court’s decision to vary downward

to probation.

The Government next argues that the District Court “paid

scant attention to the ‘nature and circumstance of the offense,’”

while placing “the entire focus . . . on the ‘history and

characteristics of the defendant’” (quoting § 3553(a)(1)). But

this averment is belied by the Government’s own statement that

the Court characterized Howe’s crime as an “isolated mistake.”

Moreover, the District Court explicitly considered the nature and

circumstances of the offense by stating that the prosecutor “has

not overreached at all in his description of the nature of the

offense and the calculated nature of the offense, and the taking

advantage of special knowledge that you possessed and to which

you came to possess during the course of your service.” This

does not constitute “scant attention” to the nature and

circumstances of Howe’s offense.

Therefore, the § 3553(a) factors in their totality

reasonably support the sentence imposed in this case, and the

District Court did not abuse its discretion in imposing the

sentence. We do not discount the importance of general

deterrence under § 3553(a)(2)(B) or of the avoidance of

unwarranted sentence disparities under § 3553(a)(6). In this

4

Again, the Government argues that Howe did not simply

make an isolated mistake as a matter of fact, but it does not

argue, assuming that factual finding is not clearly erroneous, that

the District Court still may not take it into consideration as a

mitigating factor.

25

case, however, Howe’s distinguishing characteristics render the

ultimate disparity from the Guidelines reasonably warranted. In

turn, we believe that a potential offender observing the

sentencing proceedings would receive the message that prison

time could be imposed absent those meaningful distinctions,

which satisfies the § 3553(a) goal of general deterrence

sufficiently under our one-step-removed abuse-of-discretion

standard.

Finally, the Government cites two post-Gall decisions

from sister courts of appeals that vacated unreasonably lenient

sentences. Insofar as those courts continue to exercise

substantive review of sentences post-Gall, of course we agree

with them. The problem for the Government, however, is that

there are plenty of decisions that go the other way; the question

is on which side of the spectrum Howe’s case falls. The point

is that selectively citing those cases in which an unreasonably

lenient sentence was found will not do.

For example, the Government cites United States v.

Omole, 523 F.3d 691 (7th Cir. 2008). In that case, the Seventh

Circuit found that a defendant’s 12-month sentence for wire

fraud was substantively unreasonable where the Guidelines

range was 63 to 78 months because the court was “wary of

divergent sentences based on characteristics that are common to

similarly situated defendants.” Id. at 698. But as we have

explained, the District Court in this case identified a number of

factors that are not “common to similarly situated defendants.”

In Omole, the district court hung its hat on the defendant’s

youth, limited criminal history, and potential for rehabilitation.

Here, the District Court relied on considerably more, i.e., all

26

seven factors enumerated above, from military service to

genuine remorse.

Indeed, the Seventh Circuit in a pre-Gall case (so perhaps

less deferential to the sentencing court), United States v.

Wachowiak, 496 F.3d 744 (7th Cir. 2007), reached a very

different conclusion from the one in Omale. In Wachowiak, the

court first identified four of its own cases, including two white-

collar cases, in which it had vacated sentences as unreasonably

lenient, id. at 751-52, but proceeded to distinguish those cases

because, “[i]n addition to Wachowiak’s law-abiding past and

sincere remorse, the judge found that he was ‘a kind, caring

individual, who enjoyed the broad support of family, friends,

colleagues, and teachers’ and ‘demonstrated strength of

character in confronting his problems,’ none of which were

reflected in Wachowiak’s Category I criminal history under the

guidelines.” Id. at 754. Anticipating the counterargument that

many first-time offenders share these characteristics, the

Seventh Circuit wrote: “While Wachowiak may be a typical

offender in some respects, [the district judge] sufficiently

explained why in his judgment, Wachowiak’s degree of remorse

and his otherwise good character set him apart from more

run-of-the-mill child pornography offenders.” Id. Likewise, the

District Court did not do anything unreasonable on this record

in concluding that Howe’s criminal profile is deserving of a

downward variance more than the typical white-collar offender.

The other case the Government cites is United States v.

Hunt, 521 F.3d 636 (6th Cir. 2008). There, the Sixth Circuit

held over a dissent that a sentence of probation was

unreasonably lenient in a health care fraud case when the

27

advisory Guidelines range was 27 to 33 months. But that case

is even more different from the one here, because there the

district court “appears to have relied in substantial part on its

doubt that Hunt intended to commit fraud.” Id. at 649.5 The

Sixth Circuit reached a very different conclusion in United

States v. Grossman, 513 F.3d 592 (6th Cir. 2008), in which the

district court sentenced a child-pornography possessor to 66

months instead of the 120 months recommended by the

Guidelines. There, the Sixth Circuit concluded that “[t]he

district court never lost sight of the sentence recommended by

the guidelines and gave ample reasons for reducing the sentence

as far as he did.” Id. at 597. Again, the point is that each case

must be reviewed on its own, and what the District Court did

here is more akin to what district courts have done in cases in

which their sentences have been upheld.

III.

For the foregoing reasons, we will affirm the judgment of

the District Court.

5

Again, in our case it was Howe and only Howe who said

he never intended to steal or cause harm to the government. The

district court in Hunt, by contrast, itself stated: “The jury found

he had fraudulent intent, but the court can certainly consider

those things in sentencing despite the jury’s finding.” Id. at 650.

No such indication of inconsistency on the part of the District

Court occurred here.

28