Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


2-27-1995

USA v Carrara
Precedential or Non-Precedential:

Docket 94-5204




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Recommended Citation
"USA v Carrara" (1995). 1995 Decisions. Paper 63.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/63


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                   UNITED STATES COURT OF APPEALS
                       FOR THE THIRD CIRCUIT


                            No. 94-5204


                      UNITED STATES OF AMERICA

                                 V.

                          NICHOLAS CARRARA,
                                      Appellant


         ON APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF NEW JERSEY
                 (D.C. Criminal No. 91-00537-2)


           Submitted Under Third Circuit LAR 34.1(a)
                        December 1, 1994

         Before:    HUTCHINSON and NYGAARD, Circuit Judges
                   and SEITZ, Senior Circuit Judge

               (Opinion Filed: February 27, 1995)


MICHAEL N. PEDICINI, ESQUIRE
Courthouse Plaza
60 Washington Street
Morristown, NJ 07960
Attorney for Appellant

FAITH S. HOCHBERG, ESQUIRE
United States Attorney
GLENN J. MORAMARCO, ESQUIRE
Assistant United States Attorney
970 Broad Street
Newark, NJ 07102
Attorneys for Appellee
OPINION OF THE COURT
NYGAARD, Circuit Judge.

          Appellant, Nicholas Carrara, served as president of

Omega Network Systems, Inc., which provided various labor unions,

municipalities, and other companies with administrative services

for health care claims.   Carrara engaged in two unrelated

fraudulent schemes for which he was charged: a Woodbridge

Township embezzlement scheme and a Teamsters kickback scheme.

During his trial, Carrara pleaded guilty to a one-count

information charging him with a dual conspiracy: (1) making

kickback payments to one Zingone; and (2) misappropriating

$650,000 in Woodbridge Township insurance funds.

          On appeal, Carrara contends that the government's

refusal to move for a downward departure under the United States

Sentencing Guidelines § 5K1.1 was punitive and violated his

constitutional rights; that the government's failure to recommend

a departure breached the government's plea agreement with him;

that even though he breached the agreement, it should not be

nullified because the government still benefitted from his

cooperation; and, that the disparity between the sentence imposed

on Carrara and the sentences imposed on his co-defendants makes

his sentences unlawful.   On these issues, we will affirm.    On

Carrara's claim that the district court failed to make the

required factual findings to support its restitution order,

however, we will reverse and remand.
                                I.

          Carrara entered into a cooperating plea agreement with

the government that required him to disclose truthfully all

information on all matters into which the United States

Attorney's Office inquired.   Carrara also agreed to provide

truthful testimony to the Grand Jury and at trial.   Additionally,

he agreed that if he gave any materially false information or

testimony, his plea agreement would be void.   For the

government's part, it agreed that if Carrara fully complied with

the terms of the agreement, it would file a § 5K1.1 motion,

seeking a downward departure from Carrara's sentencing guideline

range.

          Carrara cooperated with the government and gave

information by which the government was able to convict several

individuals.   That is undisputed.   Nonetheless, the government

did not file a § 5K1.1 motion for a cooperation departure, and at

sentencing Carrara received no benefit for his cooperation.

Carrara's departure issues are resolved against him by an

affidavit he filed, which he now admits was materially false,

because in filing it he breached his plea agreement and relieved

the government of its obligations.

                                A.

          The government had filed a motion to disqualify

Carrara's counsel based upon a conflict of interest.     Carrara

filed a cross motion seeking to withdraw his guilty plea,

requesting that the court order the U.S. Attorney's Office to

recuse, and urging the court to dismiss the indictment against
him.   In support of his motion, Carrara filed an affidavit

stating that although he pleaded guilty he was actually innocent.

In his affidavit, Carrara accused the government of trying to

pressure him into lying when it did not like the information he

provided.    Based upon his affidavit, his newly alleged innocence

and the government's misconduct, Carrara sought to withdraw his

guilty plea.    This affidavit, however, created more problems for

Carrara than it solved and placed Carrara in a real dilemma: if

the affidavit were true, his earlier trial testimony was perjury;

if the trial testimony were true, the affidavit was perjury.     In

sum, Carrara is "hoisted by his own petard."

            Because of the several twists and turns of events, the

district court held what amounted to a full Rule 11 hearing when

Carrara reaffirmed his guilty plea.    During the hearing, Carrara

affirmed on the record that he knew what he was doing and that

his plea was voluntary; that he understood the penalties he was

facing, and he affirmed the factual basis for his guilty plea.

The government also recorded its position on Carrara's decision

to reaffirm his guilty plea and its decision not to file a

§ 5K1.1 motion for a downward departure for Carrara.1

            The district court pointed out that when Carrara

reaffirmed his guilty plea, he was aware that the government was

not going to file a § 5K1.1 motion.    The court added that even if


1
 . The government did agree to take the position that, even
despite the false affidavit, Carrara's equation should not be
enhanced two points for obstruction of justice and in fact should
be reduced two levels for acceptance of responsibility.
the government had filed the motion, "I would have denied it, for

it is within my discretion to do so."     At issue before us is

whether the government's refusal to file a § 5K1.1 motion is a

breach of its agreement with Carrara.     What Carrara seeks is

specific performance of that agreement.

                                    B.

           It is axiomatic that it is within the government's

discretion whether to seek a § 5K1.1 departure for substantial

cooperation.   Moreover, a claim by a defendant that he has

"merely provided substantial assistance will not entitle a

defendant to a remedy...or an evidentiary hearing."      Wade v.

United States, 

, 1844 (1992) (holding that courts

have authority to review and grant a remedy to defendants who can

show the prosecutor's refusal to file a substantial-assistance

motion "was based upon an unconstitutional motive."     Id.)

Nonetheless, as in this case, once the government makes an

agreement with a defendant to file a motion, it is bound by the

terms of the agreement.   It is a simple matter of contract law.

United States v. Moscahlaidis, 

, 1360 (3d Cir.

1989).   What Carrara seems to ignore, however, is that the

agreement works both ways.    Not only must the government comply

with its terms and conditions, but so must he.     Here it is

undisputed that Carrara violated the agreement, his allegations

of pressure from the government notwithstanding, because he

supported his motion to withdraw his guilty plea with a

materially false affidavit.
           Carrara seeks to absolve himself of this (or these)

falsehoods by contending that he filed the affidavit upon advice

of ineffective counsel.   This may be a reason, but it is not an

excuse.   The fact of the matter is -- he lied.    Having done so,

he cannot come before the court with unclean hands and request

that the government now be ordered to perform his version of

equity.   Specific performance requires that the court enforce

every portion of the agreement, which most specifically here

includes the government's right to withhold its motion because

Carrara gave false testimony.

           The plea agreement explicitly states:

           Nicholas Carrara shall truthfully disclose
           all information concerning all matters about
           which this office inquires of him. Nicholas
           Carrara shall make himself available at all
           reasonable times requested by representatives
           of the Government and shall truthfully
           testify in the grand jury and at any trial as
           to any subject about which he is questioned.

Appendix, 15 (emphasis added).   It further provides:

           Should Nicholas Carrara withdraw from this
           agreement . . . or should it be established
           that Nicholas Carrara has given materially
           false, incomplete, or misleading testimony or
           information or otherwise has violated any
           provision of this agreement, the agreement
           and its benefits to Nicholas Carrara shall be
           null and void.

Appendix, 16 (emphasis added).   Finally, the agreement gives an


unambiguous warning that if Carrara were to provide misleading or

false testimony, he would be prosecuted for perjury.     This

underscores a basic premise of the plea agreement; that is, he
must provide the government with truthful and reliable

information that will aid it.

                                  C.

             We also reject Carrara's argument that it is unfair for

the government to reap the benefits of the plea agreement and

avoid its responsibilities to him.     In short, given Carrara's

breach, the government no longer has any responsibility to

request downward departure.     Moreover, to the extent that the

government benefitted from information Carrara provided, the

government was also put in the unenviable position of having to

ascertain what aspects of Carrara's testimony were true and what

were lies.     Carrara entered into the plea agreement and then

violated it.     He must now endure the results of his dishonesty.

                                  D.

             For all of the foregoing, we conclude that the

government's actions in refusing to file a § 5K1.1 motion were

proper.   Where, as here, the government is not controlled by an

agreement, it has the power but not the duty to file a

§ 5K1.1 motion.     Wade v. United 

.

Where, as here, the assistance rendered is flawed because of the

defendant's dishonesty, the government is fully justified in not

filing a motion.2

2
 . Carrara also contends that the disparity between his sentence
and that imposed upon others is contrary to the policy of the
sentencing guidelines, and requests that his sentence be vacated
and the matter remanded for resentencing. We will affirm on this
issue as well. Carrara was sentenced to a 46-month term of
imprisonment. This is within the sentencing guideline range of
41 to 51 months, and a sentencing disparity among co-defendants
is not a proper basis upon which to base a departure from the
                               II.

           Finally, appellant contends that the district court

erred by ordering him to pay $650,000 in restitution.    He does

not challenge the victims' losses, but contends only that the

court's award is not supported by a finding that he is

financially able to pay restitution.   On this issue the

government concedes error, and after careful examination of the

record we agree that the district court erred.    See United States

v. Palma, 

, 480 (3d Cir. 1985).

           Historically restitution has occupied a prominent

penological position.   It predates fines and prison, and in the

earliest penal codes, it was always awarded to the victim of a

property crime -- usually in addition to punishment.3

Restitution has customarily been awarded to answer various

penological concerns.   It is primarily restorative and is

supposed, at least partially, to replace victims in the financial

position they occupied before the offense was committed against

them.   See generally S.Rep No. 532, 97th Cong.2d Sess. 30,

reprinted in 1982 U.S.C.C.A.N. 2515, 2536-39.    In that sense,

restitution is also remonstrative, and, where indicated, will

require that offenders disgorge their illgotten gains.     United
States v. Woods, 

, 678-81 (3d Cir. 1993).    Then too,
(..continued)
guidelines. In sum, there is simply no support for appellant's
position on this issue.
3
 . The Code of Hammurabi, King of Babylon ca. B.C.E. 2285-2242,
imposes the death sentence for 27 crimes, and restitution
sentence for over 50 crimes. Trans. C.H.W. Johns, M.S.,
Edinburgh, (1905).
restitution is rehabilitative because it permits or indeed

requires that offenders personally face what they have done and,

at least partially, atone for their legal transgressions by

direct action in the form of a positive personal performance.4

Congress requires, however, that when restitution is indicated

the district court consider both the loss sustained by the victim

and the offender's financial resources, financial needs, and

present and potential earning ability.   18 U.S.C. § 3664(a).

          The question whether the district court erred here is

very close, however, because at sentencing defense counsel

introduced no financial evidence of Carrara's ability to pay.        He

argued, nonetheless, that Carrara did not have any personal

assets to make restitution.   Significantly, he also informed the

court that Carrara had another attorney assisting in filing

claims against insurance companies that provide coverage to Omega

Network Systems, seeking funds from them to repay the

embezzlement victims.   By letter, Carrara's civil attorney

informed the district court that the insurance proceeds

"arguably, may well provide [Woodbridge] with restitution."     He

added that there also "exists a reasonable probability that a

recovery against [other] third party defendants...will be

obtained."

          The district court then ordered Carrara to pay

restitution, but added that Carrara would be credited for

4
 . See Richard E. Laster, Criminal Restitution: A Survey of its
Past History and an Analysis of its Present Usefulness, 5 U.
Rich. L.Rev. 71, 80-82 (1970).
payments made by insurance companies or third parties.      In doing

so, it appears that the district court may well have

appropriately considered the aims and goals of restitution.

Moreover, although New Jersey law follows the general rule that

"an insurer may not contract to indemnify an insured against the

civil consequences of his own wilful act,"   Vargas v. Hudson

County Bd. of Elections, 

, 673 (3d Cir. 1991) quoting

Ambassador Ins. Co. v. Montes, 

, 606 (1978), it,

nonetheless, has no public policy prohibiting an indemnity in the

unique circumstances presented here, if Carrara does not benefit

and an innocent third person will receive the protection afforded

by the insurance.   

(1978).

          The difficulty is that under the court's restitution

order, if Carrara were not successful with these third-party

payers, he would be liable for the entire amount.     Defense

counsel argued that Carrara is currently indigent.     That,

however, is not determinative.   Congress recognized that

indigency may be temporary and that even an indigent offender may

be compelled to pay restitution, if necessary, during the period

of up to five years after incarceration.   18 U.S.C § 3572(d).

Hence, the district court was required to make the necessary

factual findings on all factors bearing on Carrara's current and

future ability to pay it.   United States v. Logar,    

,

961-64 (3d Cir. 1992).

          The restitution order is not adequately supported here

because the district court did not make specific findings whether

third-party payers exist, which the record suggests is so, or
whether Carrara is able to pay without them, which the records

suggests is not so.    Moreover, if restitution or its amount is to

be conditioned upon payments from insurance companies or third

party payers, or if Carrara's liability has an upper limit, the

order must expressly say so.    Finally, the court must structure

the award so that no portion of Carrara's restitutionary burden

is relieved by payments from insurance proceeds.    

.   Because the district court's order is not so

conditioned, limited or supported, we will remand the cause and

allow the district court to make the necessary inquiries and

findings.

                                III.

            In sum, we affirm the district court's sentence except

as to restitution.    We will vacate the portion of Carrara's

sentence awarding restitution and remand the cause to the

district court, giving it the opportunity to hear evidence and

make factual findings sufficient to support the order at issue,

or in the alternative, to enter a new order in an amount and upon

conditions it deems both appropriate and not inconsistent with

this opinion.