Prologue — Young v. United States

) Supreme Court US.

ge pesiey 21 2005

In The

Supreme Court of the Unites Srgeg = AERK

7

GEORGE L. YOUNG AND

KATHLEEN I. McCONNELL,

Petitioners,

Vv.

UNITED STATES OF AMERICA,

Respondent.

+

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

S

PETITION FOR A WRIT OF CERTIORARI

Se

WYRSCH Hopss & MIRAKIAN, P.C.

JAMES R. HOBBS

Counsel of Record

W. BRIAN GADDY

NATHAN J. OWINGS

1000 Walnut, Suite 1600

Kansas City, MO 64106

(816) 221-0080 Telephone

(816) 221-3280 Facsimile

Attorneys for Petitioner Young

BERKOWITZ OLIVER WILLIAMS

SHAW & EISENBRANDT, LLP

JAMES EISENBRANDT

4121 W. 83rd St., Suite 259

Prairie Village, KS 66208

(913) 649-7007 Telephone

(913) 649-9399 Facsimile

Attorneys for Petitioner McConnell

—

—-

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTIONS PRESENTED

Whether the Eighth Circuit is incorrectly applying a

plain error standard of review to sentences imposed

prior to the holding in United States v. Booker in a

manner which conflicts with tlie other Circuits, espe-

cially where the co-petitioners specifically objected to

each applicable guideline adjustment prior to sentenc-

ing which was held prior to the Booker opinion?

Whether the District Court improperly assessed a

four level upward enhancement under § 2F1.1(b)\(8)(A)

(2000) of the United States Sentencing Guidelines for

jeopardizing the safety and soundness of a financial

institution and whether this adjustment constitutes

an incorrect application of the sentencing guidelines

where the banks were not insolvent and never fell to

the lowest composite regulatory rating?

ii

TABLE OF CONTENTS

Page

SD FRIES crcitiinibintissiati i

ee Oe i ccrinrecnninvtindanidiineicalal aidticaiateaasiaeiibaianas ii

ee ri initncrctaicstntntcibinenstionientiite edness iii

NE ON ee EIT 1

Statement of Jurisdiction..................ccccccccseeeeeeeececeees

Constitutional and Statutory Provisions Involved.... 2

I ii 3

Reasons for Granting the Petition......................... aay aa

ee 19

ili

TABLE OF AUTHORITIES

Page

CASES:

Apprendi v. New Jersey, 530 U.S. 466 (2000) ........... 8,9, 13

Blakely v. Washington, 124 S.Ct. 2531 (2004)........ 6, 7, 8,9

United States v. Alvarez, 320 F.3d 765 (8th Cir.

SIE ssnsiniieitiaiaapiialiiaiteriebiaedaniimmdaamaestds.. sebivbtaeuininctilisumminbatieds 8

United States v. Ameline, 409 F.3d 1073 (9th Cir.

SEE Aner saeeieachiiadiaaniatemniensmnsilennes 11

United States v. Antonakopoulos, 399 F.3d 68 (1st

Sn TIIIIE ccsodhnetsichneeseateaneseneaieubiiserintediabitedidsaielnlinbestteunbimneeees 10

United States v. Banks, 340 F.3d 683 (8th Cir. 2003)......... 8

United States v. Booker, 125 S.Ct. 738 (2005) ........... passim

United States v. Coffey, 395 F.3d 856 (8th Cir.

2005), affirmed, 415 F.3d 882 (8th Cir. 2005)................. 8

United States v. Coles, 403 F.3d 764 (D.C. Cir. 2005)....... 1l

United States v. Collins, 361 F.3d 343 (7th Cir.

SAS me arte crt a ON NaI a 17

United States v. Cotton, 535 U.S. 625, 122 S.Ct.

REISE aR ae ae corse RR BAM 10

United States v. Crosby, 397 F.3d 103 (2d Cir. 2005)........ 11

United States v. Davis, 407 F.3d 162 (3rd Cir. 2005)........ 12

United States v. Diaz, 296 F.3d 680 (8th Cir. 2002)

rE, I, Be Ce Ce Ci Rcccittccicitcnntbccccconcuscaccecseies 8

United States v. Fields, 408 F.3d 1356 (11th Cir.

RE aes RE Co Se EES Sete ot ot Ser, 10

iv

TABLE OF AUTHORITIES ~ Continued

Page

United States v. Hamm, 400 F.3d 336 (6th Cir

EASE a ba et ee MP PRON Rare Spe ee 11

United States v. Henry, 408 F.3d 930 (7th Cir. 2005)....... 11

United States v. Leisure, 412 F.3d 857 (8th Cir.

BODE) wevrccecrorsorsccvrsersccsorscsecsssessecorsersecsesncersscersssassorersseees 10

United States v. Mares, 402 F.3d 511 (5th Cir. 2005) ....... 10

United States v. Mashek, 406 F.3d 1012 (8th Cir.

a a 13

United States v. Olano, 507 U.S. 725, 113 S.Ct.

REPRE RRL TRE CORR Ane eN Ls oy RRB Pe Oe eR 9

United States v. Paladino, 401 F.3d 471 (7th Cir.

ic a a 11, 12

United States v. Piggie, 316 F.3d 789, cert. denied,

I a al ae 8

United States v. Pirani, 406 F.3d 543 (8th Cir. 2005).. 7, 9, 10

United States v. Rodriguez, 398 F.3d 1291 (11th

Cir.), cert. denied, 162 L.Ed. 2d 866, 125 S.Ct.

RS ESS SERIA LS Hie onary te dn PR 10, 12

United States v. Sdoulam, 398 F.3d 981 (8th Cir.

ES SLR OO OEP ED Ont AR aay 9

United States v. Selwyn, 398 F.3d 1064 (8th Cir.

STII snlsdicceonisruiasihciiesithdidahcabasdlatinieadi dan cvideodiiasatiecsisinamndeddadliabinsitied: 8

United States v. Young, 413 F.3d 727 (8th Cir. 2005) ..... 1,6

CONSTITUTIONAL PROVISIONS:

eS SE RRR FOS 0 LMS SRI INY RENNER Os PM no 2

TABLE OF AUTHORITIES -— Continued

Page

STATUTES:

a eT 3

Ee ee ean eee eC anns eee 3

18 U.S.C. § 1341........ Ee TL eT Te 3

| gE aes ker meee 3

tS Ee ane aes en 3

I a a 1

FEDERAL SENTENCING GUIDELINE PROVISIONS:

U.S.S.G. § 2B1.1(13\B\i) (2004)........ ssdhilasibiinsiediaatitndeiedinaian 14

Sa Say ELSON CIE OD ceceuecncesesevnpescsssqneennseesentuecee 5

Ey FA a IED GOOD ceccsccciyrerdecccrespentncnnnsecsemebetenes 5

U.S.S.G. § 2F1.1(bK4 XC) (2O00)...........ccecerrccccesserseesesereeseees 5

U.S.S.G. § 2F1.1(bKG6XC) (2OOO)..............eecseesreeeeererererseeeens 5

U.S.S.G. § 2F1.1(b)8)A) (2000)............c000: . 2, 5, 13, 14, 18

U.S.S.G. § 2F1.1(b\8A) comment. (n. 20) (2000) . 2, 14, 15

of Fo BR neice 5

OTHER PROVISIONS:

I CRIS BENE BP cecececncstenmeesnepevevseenteniensacseteninednan 14

gE ee 1

ee eere 1

EINES IUINED GUN coccnncsiseveerscnveretmeniientcdeenunieeneaneess 1

a

PETITION FOR WRIT OF CERTIORARI

George L. Young and Kathleen I. McConnell respect-

fully petition this Court for a writ of certiorari to review

the judgment of the United States Court of Appeals for the

Eighth Circuit entered in this case.

+

OPINIONS BELOW

The opinion in the Court of Appeals for the Eighth

Circuit affirming the sentence of the District Court is

reported in United States v. Young, 413 F.3d 599 (8th Cir.

2005), and is reprinted in the Appendix hereto at App. 1-14.

+

STATEMENT OF JURISDICTION

The Court of Appeals for the Eighth Circuit entered

its judgment on July 5, 2005. App. at 1. Co-petitioners,

George Young and Kathleen McConnell, timely filed a

petition for rehearing and rehearing en banc in the Court

of Appeals for the Eighth Circuit. On August 22, 2005, the

Court of Appeals for the Eighth Circuit issued an order

denying both the petition for rehearing and rehearing en

banc. App. at 55. The present petition for writ of certiorari

is timely filed pursuant to Supreme Court Rules 13.1 and

13.3.

Petitioner George Young and Petitioner Kathleen

McConnell, as parties interested jointly in the judgment

sought to be reviewed, file this petition jointly pursuant to

Supreme Court Rule 12.4.

This Court has jurisdiction under 28 U.S.C. § 1254(1)

to grant a petition for a writ of certiorari, filed by a party

2

to a federal criminal case, to review the judgment of a

federal court . ppeals.

+

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

_ The Sixth Amendment to the United States Constitu-

tion which reads:

In all criminal prosecutions, the accused shall

enjoy the right to a speedy and public trial, by an

impartial jury of the State and district wherein

the crime shall have been committed, which dis-

trict shall have been previously ascertained by

law, and to be informed of the nature and cause

of the accusation; to be confronted with the wit-

nesses against him; to have compulsory process

for obtaining witnesses in his favor, and to have

the Assistance of Counsel for his defense.

United States Sentencing Guideline § 2F1.1(b)(8)(A)

(2000) which reads:

(b) Specitic Offense Characteristics

(8) Ifthe offense —

(A) substantially jeopardized the safety

and soundness of a financial institu-

tion;

— increase by 4 levels

United States Sentencing Guideline § 2F1.1(b)(8)(A) com-

ment. (n. 20) (2000) which reads:

An offense shall be deemed to have “substan-

tially jeopardized the safety and soundness of a

financial institution” if, as a consequence of the

3

offense, the institution became insolvent; sub-

stantially reduced benefits to pensioners or in-

sureds; was unable on demand to refund fully

any deposit, payment, or investment; was so de-

pleted of its assets as to be forced to merge with

another institution in order to continue active

operations; or was placed in substantial jeopardy

of any of the above.

°

STATEMENT OF THE CASE

A grand jury indictment was returned charging Mr.

Young and Ms. McConnell with two counts of mail fraud in

violation of 18 U.S.C. § 1341, one count of wire fraud in

violation of 18 U.S.C. § 1343, one count of making false

statements in violation of 15 U.S.C. § 50 and one criminal

forfeiture count in violation of 18 U.S.C. § 982. App. at 1-2.

Mr. Young and Ms. McConnell voluntarily appeared

before the court and entered pleas uf guilty to each charge

of the indictment. App. at 1. The guilty pleas were the

result of a written plea agreement between the parties and

the government. App. at 1. The district court had proper

jurisdiction pursuant to 18 U.S.C. § 3231, which provides

that the district courts shall have original jurisdiction of

“all offenses against the laws of the United States.”

Mr. Young and Ms. McConnell were business associ-

ates in several businesses which primarily involved buying

and selling cattle as well as cattle management. App. at 2.

Mr. Young is seventy-five years old and a long-time cattle

rancher. Ms. McConnell is fifty-six years old and is an

accountant. Mr. Young and Ms. McConnell conducted

business with individual investors who were guaranteed

fixed returns. App. at 2. Following a decline in the cattle

4

business, co-petitioners could not meet the guaranteed

rates of return to their customers. App. at 2. As a result,

they began the process of engaging in fictitious transac-

tions to satisfy their clients’ demands. App. at 2. For

several years, the petitioners were able to provide a return

to their clients. However, the business finally collapsed in

2001. App. at 2. The co-petitioners voluntarily contacted

the United States Attorney's Office for the Western Dis-

trict of Missouri, closed their businesses, and filed for

bankruptcy protection. App. at 73.

At the time that the co-petitioners came forward, the

cattle business owned approximately 17,000 head of cattle.

App. at 2. Yet, they represented that they owned nearly

343,000 head of cattle. App. at 2. For guideline purposes,

the loss was approximately $147 million as to individual

investors. App. at 2. The banks lost approximately $36

million. App. at 2. Approximately $16 million was recov-

ered from assets of the companies and distributed to the

alleged victims. App. at 2.

Specifically, three different Nebraska banks were

allegedly placed in substantial jeopardy when individual

investors were unable to pay back loans after the cattle

business collapsed in 2001. App. at 7. The banks aliegedly

placed in jeopardy included: Elkhorn Valley Bank & Trust,

the Bank of Madison, and the First National Bank of

Beemer, App. at 7. The Federal Deposit Insurance Corpo-

ration (FDIC) rated the banks as part of its regulatory

examination process following the collapse of the busi-

ness. App. at 7-8. The FDIC noted that the banks’ losses,

“stemmed from a high concentration of loans to a particu-

lar group of cattle buyers, but otherwise characterized

the bank’s management as strong.” App. at 8. Co-

petitioners argued on direct appeal that the practices of

bank management contributed to the bank losses. App. at

10. In other words, the misconduct of the co-petitioners

was not the sole reason the banks were allegedly in

jeopardy. Further, the banks never achieved a rating lower

than a four.’ App. at 8. ”

The court conducted a sentencing hearing on May 24,

2004. App. at 16, 36. The district court made several

adjustments to Petitioner George Young’s base offense

level of six. App. at 3. There was an eighteen level increase

for amount of loss pursuant to United States Sentencing

Guideline Manual (U.S.S.G.) § 2F1.1(bX1)\(S) (2000); a two

level increase for more than minimal planning pursuant to

U.S.S.G. § 2F1.1(bX2) (2000); a two level increase for using

sophisticated means pursuant to U.S.S.G. § 2F1.1(b\6\C)

(2000); a four level increase for substantially jeopardizing

the safety and soundness of a financial institution pursu-

ant to U.S.S.G. § 2F1.1(b)(8)(A) (2000); a two level increase

for an offense involving the violation of a prior administra-

tive order pursuant to U.S.S.G. § 2F1.1(b)(4XC) (2000); and a

three level decrease for acceptance of responsibility pursuant

to U.S.S.G. §3E1.1(b) (2000). App. at 3. The court then

departed an additional two levels downward for Mr.

Young’s extraordinary acceptance of responsibility and

' The FDIC rates banks on a scale of 1 to 5, with 1 indicating that

the bank has a strong performance and is of little supervisory concern,

2 indicating that a bank is fundamentally sound and provides no

material supervisory concerns; 3 indicating some supervisory concern

but failure is unlikely; 4 indicating concerns regarding unsafe or

unsound practices such that a failure is a distinct possibility if weak-

nesses are not addressed and resolved; and 5 indicating extremely

unsafe or unsound practices such that failure is highly probable. App.

at 8.

6

extensive cooperation. App. at 3. This downward adjust-

ment resulted in a sentencing range of 87-108 months.

App. at 3. The court sentenced Mr. Young to 108 months.

App. at 3. The court applied the same adjustments to Ms.

McConnell’s base offense level except for the two level

increase for violation of a prior administrative order. App.

at 3. Ms. McConnell also received a two level downward

departure for extraordinary acceptance of responsibility

and exceptional cooperation with law enforcement and the

bankruptcy authorities, which resulted in a sentencing

range of 70-87 months. App. at 3. The court imposed a

sentence of 87 months. App. at 3. Co-petitioners were also

ordered to pay restitution in the amount of $182,981,100.05.

App. at 15-54. Co-petitioners submitted a joint sentencing

memorandum objecting to all enhancements to their

sentence. App. at 71-83. The district court rejected all

objections to the enhancements. App. at 3.

Co-petitioners appealed to the Eighth Circuit chal-

lenging the applicability of the enhancement for substan-

tially jeopardizing the safety and soundness of < “nancial

institution. App. at 3. Following their plea and sentencing,

but prior to their appeal, this Court issued opinions in

Blakely v. Washington, 124 S.Ct. 2531 (2004) and United

States v. Booker, 125 S.Ct. 738 (2005). Co-petitioners also

argued on direct appeal that the application of the en-

hancements by the district court violated the Sixth

Amendment as construed in Blakely and Booker, supra.

The Eighth Circuit issued an opinion on July 5, 2005,

which was reported as United States v. Young, 413 F.3d

727 (8th Cir. 2005) affirming the judgment of the district

court. App. at 1-14. Petitioners filed a timely petition for