Filed: Jun. 21, 2005
Latest Update: Feb. 21, 2020
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FILED FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS _ ELEVENTH CIRCUIT JUNE 21, 2005 No. 04-13456 THOMAS K. KAHN _ CLERK D. C. Docket No. 03-00374-CR-C-S UNITED STATES OF AMERICA, Plaintiff-Appellant, versus RICHARD E. BOTTS, Defendant-Appellee. _ Appeal from the United States District Court for the Northern District of Alabama _ (June 21, 2005) Before BLACK and HULL, Circuit Judges, and O’KELLEY *, District Judge. PER CURIAM: * Honorable W
Summary: [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FILED FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS _ ELEVENTH CIRCUIT JUNE 21, 2005 No. 04-13456 THOMAS K. KAHN _ CLERK D. C. Docket No. 03-00374-CR-C-S UNITED STATES OF AMERICA, Plaintiff-Appellant, versus RICHARD E. BOTTS, Defendant-Appellee. _ Appeal from the United States District Court for the Northern District of Alabama _ (June 21, 2005) Before BLACK and HULL, Circuit Judges, and O’KELLEY *, District Judge. PER CURIAM: * Honorable Wi..
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
JUNE 21, 2005
No. 04-13456 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 03-00374-CR-C-S
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
RICHARD E. BOTTS,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(June 21, 2005)
Before BLACK and HULL, Circuit Judges, and O’KELLEY *, District Judge.
PER CURIAM:
*
Honorable William C. O’Kelley, United States District Judge for the Northern District
of Georgia, sitting by designation.
Defendant-appellee Richard E. Botts, a former HealthSouth Corporation
(“HealthSouth”) executive, pled guilty to conspiracy to commit securities fraud
and mail fraud and falsify books and records, in violation of 18 U.S.C. § 371. At
sentencing, the district court properly calculated the guidelines sentence as 60
months’ imprisonment. The district court then granted the government’s § 5K1.1
motion for downward departure based on Botts’s substantial assistance. Instead of
departing to 40 months’ imprisonment, as recommended by the government, the
district court imposed a sentence of probation. The government now appeals the
extent of the district court’s downward departure. After review and oral argument,
we vacate Botts’s sentence in its entirety and remand this case to the district court
for resentencing.
I. BACKGROUND
A. Factual Background
From 1988 to 2003, Defendant Botts was employed in HealthSouth’s tax
department. In 1998, Botts was promoted to the position of Senior Vice President
for Tax. In that position, Botts was responsible for HealthSouth’s tax returns and
for providing information to taxing authorities.
From 1996 through March 2003, a group of HealthSouth officers conspired
to artificially inflate HealthSouth’s reported earnings, earnings per share, and
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overall financial condition. As a result, HealthSouth’s public financial records
overstated its assets by hundreds of millions of dollars, and public investors
purchased overvalued shares of HealthSouth’s stock. According to the presentence
investigation report (“PSI”) prepared in this case, the approximate amount of the
loss to HealthSouth investors was $1.4 billion.
Botts became aware of the conspiracy in 2000, when he was informed that
fictitious assets appeared on HealthSouth’s books. Thereafter, Botts provided
auditors with asset schedules that he knew included phony assets. In addition, in
2001 and 2002, Botts prepared and submitted HealthSouth tax returns that he knew
included material, false information about HealthSouth’s taxable income,
depreciation deductions, and assets. Botts, or someone acting at Botts’s direction,
placed the fraudulent tax returns in the United States mail.
B. Procedural History
On July 31, 2003, the government filed a three-count information against
Botts. The information charged Botts with: (1) conspiracy to commit securities
fraud (a violation of 15 U.S.C. §§ 78m(b)(2)(A) & (B), and 17 C.F.R. §§ 240.13a-
1, 13a-13 & 13b2-2 ), falsify books and records (a violation of 15 U.S.C. §§
78m(b)(2)(A) & (B), 78m(b)(5) and 78ff), and commit mail fraud (a violation of
18 U.S.C. § 1341), all in violation of 18 U.S.C. § 371 (Count One); and (2) mail
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fraud, in violation of 18 U.S.C. §§ 1341 and 1342 (Count Two). The information
also included a forfeiture count (Count Three). On August 27, 2003, Botts pled
guilty to all three counts of the information pursuant to a plea agreement.1
The PSI indicated that Botts’s total offense level was 34 and his criminal
history category was I, which ordinarily would yield a guidelines range of 151 to
188 months’ imprisonment. However, the statutory maximum sentence for Botts’s
offense was 60 months’ imprisonment. As a result, the PSI assessed a guidelines
sentence of 60 months’ imprisonment pursuant to U.S.S.G. § 5G1.1(a).2
On June 1, 2004, the government filed a motion for downward departure
under U.S.S.G. § 5K1.1 based on Botts’s substantial assistance. In that motion, the
government explained that “[f]rom the discovery of the defendant’s participation in
the conspiracy,” Botts had been truthful and cooperated “without hesitation,” had
been available “on a continuous and regular basis,” and had “provided invaluable
assistance in helping the United States, HealthSouth, and the forensic auditor
discover, in an expeditious manner, the varied ways in which the fraud was
conducted.” The government’s motion further stated that “[t]he defendant’s
1
Count Two of the information subsequently was dismissed and Botts’s guilty plea on
Count Two was withdrawn.
2
U.S.S.G. § 5G1.1(a) states: “Where the statutorily authorized maximum sentence is less
than the minimum of the applicable guideline range, the statutorily authorized maximum
sentence shall be the guideline sentence.”
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assistance has facilitated both the securing of guilty pleas from other co-
conspirators and the prosecution of other individuals yet to be convicted,” and that
Botts’s “immediate cooperation has allowed the HealthSouth case to be prosecuted
at a pace which, on a relative basis, constitutes swift and efficient enforcement of
the United States’ criminal laws.”
At the June 2, 2004, sentencing hearing, the district court found, in
accordance with the PSI, that the offense level was 34 and Botts’s criminal history
category was I, yielding a guidelines range of 60 months’ imprisonment. The
government then presented its motion for downward departure, and requested that
the district court sentence Botts to 40 months’ imprisonment. While the
government sought a reduction in Botts’s 60-month sentence as a result of his
cooperation, it argued that his conduct merited a substantial prison term of 40
months, as follows:
All said, Your Honor, the government is compelled in this case
to recommend a substantial term of imprisonment and we would ask
the Court to depart downward from the maximum sentence of 60
months to a sentence of 40 months imprisonment. That is the term of
imprisonment which the government believes is reasonable to indicate
the seriousness of this offense, to reflect punishment to this defendant
for his conduct.
I might add, Your Honor, this was not one of the individuals
who walked in and voluntarily cooperated with the government,
before we knew about the fraud. Yes, after other individuals came in
and disclosed to the government that there was a massive accounting
fraud underway at HealthSouth, Mr. Botts did come in and admit his
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participation in that conspiracy.
But, he made a choice, Your Honor, and that was when he was
confronted with the horrifying facts of this accounting fraud, instead
of reporting it, he chose to become a member fo the conspiracy.
The district court then engaged in the following dialogue with the
government:
THE COURT: Well, you’re not suggesting that anything less than
40 months would be unreasonable, are you?
MR. WIEDIS: Your honor, that is the government’s position.
THE COURT: So what you’re saying is that even if he testifies, as
I expect he will, in the other cases and cooperates
fully, the government would not plan on filing a
motion for a downward departure after he’s
testified.
MR. WIEDIS: I know that the government might avail itself of
the Rule 35 of the Federal Rules of Criminal
Procedure and make a motion for a further
downward departure.
THE COURT: So the government would have that option to in
fact, after he testifies, ask that he be placed on
probation?
MR. WIEDIS: The law provides an opportunity for the
government to make a motion for a further
reduction in sentence after somebody testifies.
That’s correct.
The district court then heard from Botts’s counsel, who outlined Botts’s role
in the conspiracy, the extent of his cooperation, and his character and background,
and requested probation.
After hearing from Botts’s counsel, the district court departed downward to
a level 8, which yielded a guidelines imprisonment range of 0 to 6 months. The
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government requested the maximum term of 6 months’ imprisonment. The district
court then imposed a sentence of 60 months’ probation, with a special condition of
6 months’ home detention. The government objected to the reasonableness of the
§ 5K1.1 departure in the district court.
In its written judgment, the district court checked the box stating that the
downward departure was “based on 5K1.1 motion of the government based on the
defendant’s substantial assistance,” and offered no further reasons.
The government timely appealed the district court’s downward departure.
II. DISCUSSION
On appeal, the government argues that: (1) the extent of the downward
departure and resulting sentence were unjustified and unreasonable; and (2) that
the district court failed to adequately and specifically state the reasons for its
departure.3
Section 5K1.1 of the United States Sentencing Guidelines specifies that the
district court may depart downward based on the defendant’s substantial assistance
for reasons stated that may include, but are not limited to,
consideration of the following factors:
(1) the court’s evaluation of the significance and usefulness of the
defendant’s assistance, taking into consideration the
government’s evaluation of the assistance rendered;
3
We review the extent of a departure for an abuse of discretion. See United States v.
Blas, 360 F.3d 1268, 1274 (11th Cir. 2004).
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(2) the truthfulness, completeness, and reliability of any
information or testimony provided by the defendant;
(3) the nature and extent of the defendant’s assistance;
(4) any injury suffered, or any danger or risk of injury to the
defendant or his family resulting from his assistance;
(5) the timeliness of the defendant’s assistance.
U.S.S.G. § 5K1.1(a) (emphasis added). The commentary to § 5K1.1 recognizes
that “[t]he nature, extent, and significance of assistance can involve a broad
spectrum of conduct that must be evaluated by the court on an individual basis,”
and thus that latitude is afforded the sentencing judge to reduce a sentence based
on “variable relevant factors.” U.S.S.G. § 5K1.1 comment. (backg’d.). “The
sentencing judge must, however, state the reasons for reducing a sentence under
this section.” Id. (citing 18 U.S.C. § 3553(c)) (emphasis added).4 Thus, the
guidelines require that the district court’s stated reasons must be individualized to
the defendant based on the relevant factors and more specific than a simple
statement that the reduction is based on the defendant’s substantial assistance.
Further, the commentary to § 5K1.1 requires the sentencing court to give
“substantial weight . . . to the government’s evaluation of the extent of the
defendant’s assistance . . . .” U.S.S.G. § 5K1.1, comment. n.3.
4
Pursuant to 18 U.S.C. § 3553(c), if the district court imposes a sentence “outside the
[guidelines] range, . . . the specific reason for the imposition of a sentence different from that
described, . . . must also be stated with specificity in the written order of judgment and
commitment . . . .”
8
The government did not raise any Booker issue in its appeal, and thus there
is no Booker-type issue that we must review in this appeal. Rather, this appeal
concerns only the application of § 5K1.1 of the guidelines to Botts’s sentence.5
This Court reviews a downward departure from the guidelines range for
“reasonableness.” See United States v. Blas, 360 F.3d 1268, 1274 (11th Cir.
2004). In Blas, we explained that “a reviewing court determines the
reasonableness of the departure in light of the factors to be considered in imposing
the sentence and the reasons the district court provided for departing.” Id.; see also
Williams v. United States,
503 U.S. 193, 203,
112 S. Ct. 1112, 1121 (1992). “The
district court’s reasons must be sufficiently specific so that an appellate court can
engage in the meaningful review envisioned by the Sentencing Guidelines.”
United States v. Suarez,
939 F.2d 929, 933 (11th Cir. 1991). Although we need
not decide whether the district court must discuss each of the five factors set forth
5
Botts was sentenced prior to the Supreme Court’s decision in United States v. Booker,
— U.S. —, 125 S. Ct. 738 (2005). Although there is no Booker issue that this Court must
review in this appeal, Booker will come into play at resentencing. Accordingly, while the
district court will not be bound by the guidelines on remand, it first must correctly determine
Botts’s guidelines sentence, including any departures permitted under the guidelines, and then
impose a sentence that is reasonable in light of the factors set forth in 18 U.S.C. § 3553(a). See
United States v. Crawford,
407 F.3d 1174, 1178 (11th Cir. 2005) (stating that “the Supreme
Court concluded in Booker that district courts must still consider the Guidelines in determining a
defendant’s sentence,” and that remand is required in any case in which the sentence was
imposed as a result of an incorrect guidelines application (citation omitted)). If the district court
imposes a sentence outside the guidelines range, it must state the reasons for the imposition of
that sentence. 18 U.S.C. § 3553(c).
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in § 5K1.1, we conclude the district court must, at a minimum, give some
indication of the § 5K1.1 factors upon which it relies and the reasons for the extent
of the departure.
Here, the district court granted Botts an extraordinary departure, departing
downward by 26 levels and eliminating a 60-month term of imprisonment. Yet the
district court failed to specify any reasons, either orally or in his written statement
of reasons, for this extraordinary departure. It is unclear from the record (1)
whether the district court relied upon permissible factors 6 and (2) if so, whether the
extent of the departure was reasonable. As a result, the record in this case is
incapable of meaningful appellate review. “Although the district court has broad
discretion in determining the extent of a downward departure, that discretion is not
without limits, and appellate review is not an empty exercise.” United States v.
Dalton, 404 F.3d 1029, 1034 (8th Cir. 2005). Particularly in light of the
extraordinary departure in this case, we will not presume that the extent of the
departure was reasonable. See
id. at 1033.7
6
There is some indication in the record that the district court’s extraordinary departure
possibly was based in part on its view that the government could, or even would, later seek a
further reduction of Botts’s sentence pursuant to Rule 35 of the Federal Rules of Criminal
Procedure – an impermissible basis for a § 5K1.1 departure. However, because the district court
failed to provide any reasons for the extent of its departure, we cannot determine on this record
whether the district court’s basis for departure was permissible.
7
We reject Botts’s argument that we must affirm because the government did not object
in the district court to the district court’s failure to specify the reasons for its departure. The
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Accordingly, we vacate Botts’s sentence and remand this case to the district
court for resentencing consistent with this opinion and with the Supreme Court’s
decision in Booker.
VACATED AND REMANDED.
government did object in the district court to the unreasonableness of the extent of the departure
and has preserved that objection on appeal, and this Court cannot determine the reasonableness
issue without knowing the reasons for the departure.
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