USCA1 Opinion
March 28, 1995
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1725
UNITED STATES OF AMERICA,
Plaintiff, Appellee,
v.
STANLEY LABOVITZ,
Defendant, Appellant.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
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Before
Torruella, Chief Judge,
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Boudin and Stahl, Circuit Judges.
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Stanley Labovitz on brief pro se.
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Donald K. Stern, United States Attorney, and Mark J. Balthazard,
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Assistant United States Attorney, on brief for appellee.
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Per Curiam. On December 6, 1993, appellant Stanley
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Labovitz pleaded guilty to thirteen counts of bankruptcy
fraud. Approximately eleven weeks later, still before
sentencing, appellant moved to withdraw his plea pursuant to
Fed. R. Crim. P. 32(d). The district court denied this
motion and subsequently imposed sentence. This appeal
followed. For the following reasons, we affirm.
BACKGROUND
During the 1980's, appellant was an attorney practicing
bankruptcy and debt-collection law. Appellant also invested
in real estate, and he owned or controlled various real
estate entities including Hartwell Realty Corporation
("Hartwell"), 316 Main Street, Inc. ("316 Main"), and S.S.L.,
Inc. ("S.S.L."). On April 27, 1993, a federal grand jury
returned an indictment charging appellant with twenty-three
counts of bankruptcy fraud. See 18 U.S.C. 152. In
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particular, the indictment charged appellant with engaging in
a scheme to defraud by filing bankruptcy petitions for
Hartwell, 316 Main, S.S.L., and himself personally, and
thereafter transferring and concealing assets. The
indictment also charged him with providing materially false
information in connection with these petitions.
On December 3, 1993, appellant entered into a plea
agreement with the government under which he agreed to plead
guilty to counts 1, 3, 7-8, 10, and 16-23 of the indictment.
The change of plea hearing was held on December 6, 1993. At
the hearing, the prosecutor summarized the evidence the
government would have presented at trial. The district court
accepted the change of plea and set a date for sentencing.
On February 24, 1994, appellant filed a motion to withdraw
his guilty plea. In his motion, he primarily argued that the
district court's plea colloquy failed to comply with the
requirements of Fed. R. Crim. P. 11. Following a hearing on
March 25, 1994, the district court orally denied this motion
on the grounds that there is no "fair and just reason" to
allow the withdrawal.
A sentencing hearing was conducted, and sentence was
imposed, on June 16, 1994. In the course of the hearing, the
district court made specific findings that the amount of loss
was $137,217.00 on Count 1; $34,356.67 on Count 7; $26,758.26
on Count 20, $5,206.89 on Count 21; and $25,000.00 on Count
22. As a result, the district court, acting pursuant to
U.S.S.G. 2F1.1, adjusted appellant's base offense level of
6 upward by 8 levels to reflect a loss of between $200,000.00
and $350,000.00.1 The court imposed a fifteen month
sentence of imprisonment, the bottom end of the applicable
guideline range, followed by a period of supervised release.
The court also ordered restitution of $231,573.67.
DISCUSSION
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1. The court then made a two level increase to reflect more
than minimal planning and a two level downward adjustment for
acceptance of responsibility, to reach a total offense level
of 14. Based on appellant's criminal history category I, his
sentencing range was fifteen to twenty-one months.
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A. THE DENIAL OF APPELLANT'S MOTION TO WITHDRAW HIS
GUILTY PLEA.
A district court "may permit" a defendant to withdraw
his guilty plea prior to sentencing for any "fair and just"
reason. United States v. Daniels, 821 F.2d 76, 78 (1st Cir.
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1987); Fed. R. Crim. P. 32(d). We have recently reiterated
that:
There are several factors to consider in
determining whether a defendant has met this
burden, the most significant of which is whether
the plea was knowing, voluntary and intelligent
within the meaning of Rule 11. The other factors
include: 1) the force and plausibility of the
proffered reason; 2) the timing of the request; 3)
whether the defendant has asserted his legal
innocence; and 4) whether the parties had reached a
plea agreement.
United States v. Cotal-Crespo, 1995 WL 27378 at *1 (1st Cir.
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Jan. 30, 1995) (citations omitted). We will reverse the
district court only for an error of law or for demonstrable
abuse of discretion. Id. at *3. We do not think that
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reversal is warranted here.2
Appellant argues that the district court erred in
requiring him to provide a "strong" rather than "fair and
just" reason for withdrawal, and that it unfairly held him to
this higher standard because he was an attorney. We find no
error. Appellant had argued below, inter alia, that the
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2. Arguably, an outright violation of Rule 11 might require
the court to allow the withdrawal of a guilty plea unless the
violation was found to be harmless. See United States v.
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Raineri, 42 F.3d 36, 41 (1st Cir. 1994). Here, however, we
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find no violation of Rule 11 at all.
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district court failed to adequately inform him of, and
determine that he understood, the nature of the charges. See
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Fed. R. Crim. P. 11(c). The district court was entitled to
consider appellant's background and sophistication in
determining whether these core concerns of Rule 11 were
satisfied. See United States v. Allard, 926 F.2d 1237, 1245
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(1st Cir. 1991) ("The manner in which the charge is explained
and the method for determining the defendant's understanding
necessarily vary from case to case depending upon the
capacity of the defendant and the attendant circumstances.").
The court's ruling on the motion to withdraw leaves no doubt
that it evaluated the motion under the correct legal
standard, and that it denied the motion because it found no
"fair and just" reason for withdrawal.
Appellant also argues that he should have been allowed
to withdraw his guilty plea because there was insufficient
factual basis for it. See Fed. R. Crim. P. 11(f). In
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support of this argument, he draws our attention to various
statements he made at the change of plea hearing which could
be construed as denials by him that he had the intent to
defraud. See United States v. Grant, 971 F.2d 799, 802 (1st
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Cir. 1992) (discussing elements of bankruptcy fraud). In
addition, appellant cites to various documents, appended to
his brief, which he suggests demonstrates his innocence of
the crimes charged in counts 1 and 20.
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It is well-settled that the prosecutor's statement of
facts on the record can satisfy the requirement of a factual
basis for the plea. See, e.g., United States v. Ray, 828
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F.2d 399, 405-06 (7th Cir. 1987), cert. denied, 485 U.S. 964
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(1988). This statement of facts need not be uncontroverted.
A court may accept a plea even when the defendant protests
his innocence if there is a strong evidence in the record of
the defendant's actual guilt. North Carolina v. Alford, 400
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U.S. 25, 37 (1970); United States v. Walsh, 7 F.3d 1064, 1066
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(1st Cir. 1993). Similarly, when the district court
establishes a sufficient factual basis for the plea at the
Rule 11 hearing, the guilty plea may stand even if the
defendant later claims innocence and challenges the plea.
See United States v. Keiswetter, 860 F.2d 992, 998 (10th Cir.
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1988) (Moore, J., dissenting); United States v. Owen, 858
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F.2d 1514, 1516-17 & n.2 (11th Cir. 1988).
In the instant case, the prosecutor's proffer provided
ample factual basis for accepting the guilty plea. In this
proffer, the prosecutor detailed a lengthy pattern of
omissions, material misstatements, and transfers of
bankruptcy estate property by appellant. Given the sheer
number of "mistakes," the size of the assets concealed, and
appellant's many years of experience practicing bankruptcy
law, we think the judge was entitled to conclude that a
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substantial basis existed for believing that appellant's
actions were knowing and fraudulent.3
The documents that appellant cites do not alter our
conclusion. Count 1, which relates to the Hartwell
bankruptcy, charged appellant with failing to disclose
approximately $350,000.00 in loans owing to Hartwell from
appellant and his business partner. Appellant contends that
there can be no fraudulent intent since the final decision to
treat the $350,000.00 as a loan to officers (rather than
compensation) was not made until November 1991, roughly ten
months after he filed Hartwell's bankruptcy petition.4
However, appellant should have disclosed the asset even if
its status at the time of filing was uncertain. See United
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States v. Cherek, 734 F.2d 1248, 1254 (7th Cir. 1984) ("It is
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a reasonable reading of 18 U.S.C. 152 to conclude that the
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3. We add that the district judge made a finding on the
record that defendant's plea of guilty is "supported by an
independent basis in fact" for each of the "essential
elements" of the offense charged. We do not think that the
judge's question about the requisite mental state for
bankruptcy fraud, asked at a later proceeding, warrants an
inference that he was confused about this element and did not
fulfill his duty under Rule 11(f).
4. In support of this claim, appellant draws our attention
to two affidavits of Curtis Feldman, accountant for Hartwell.
Although these affidavits are outside the record, we consider
the information they contain because it was proffered to the
district court at sentencing. We note, however, that the
remaining documents appellant cites in connection with count
1--Hartwell's bankruptcy petition and amendment--cannot
inform our decision because they are not part of the record
on direct appeal. See Fed. R. App. P. 10(a).
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statute requires a bankrupt to disclose the existence of
assets whose immediate status is uncertain."), cert. denied,
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471 U.S. 1014 (1985). Moreover, appellant did not disclose
the asset even after November 1991, and the indictment
charged him with a "continuing failure" to disclose through
October 1992. Under the circumstances, the district court
could reasonably conclude that he was guilty.
Count 20, which relates to appellant's personal
bankruptcy, charged him with failing to disclose
approximately $25,000 worth of Keystone Fund money market
shares which he owned. Appellant contends that various
documents, submitted to the district court at sentencing,
prove his lack of fraudulent intent. These documents
indicate that in February 1986, appellant requested that
these shares be transferred to his wife. However, the
government proffered evidence that appellant received monthly
statement and interest payments from Keystone, mailed to his
law office, both before and after filing his bankruptcy
petition in May 1992. Under the circumstances, there was a
strong basis for concluding that appellant knew the transfer
had not occurred and intended to conceal the asset. The fact
that appellant reported the asset to the bankruptcy trustee
in February 1993, two months prior to his indictment, does
not alter our conclusion. There is evidence in the record
which suggests that he knew by then that he was under
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criminal investigation in connection with several bankruptcy
filings.
Finally, having determined that appellant's principal
points are without merit, we consider the traditional factors
relevant to the review of a change of plea request. The
record reveals that appellant understood the substance of the
charges against him, and suggests that he made a calculated
decision that it was in his interest to plead guilty. The
plea was part of a quid pro quo negotiated with the
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government. See United States v. Pellerito, 878 F.2d 1535,
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1541 (1st Cir. 1989). A defendant is not entitled to
withdraw his guilty plea simply because he asserts a
subjective belief in his innocence. See United States v.
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Ramos, 810 F.2d 308, 312 (1st Cir. 1987). Given the totality
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of the circumstances, we cannot say the district court abused
its discretion in finding no "fair and just reason" for
retraction.
B. INEFFECTIVE ASSISTANCE OF COUNSEL.
Ordinarily, we do not address ineffective assistance of
counsel arguments on direct appeal. This case is no
exception. Appellant argues that trial counsel was
ineffective because he pressured him into pleading guilty and
misinformed him that it was too late to change his mind after
signing the plea agreement. These charges depend upon
evidentiary matters which are best considered by the district
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court in the first instance. See United States v. Mala, 7
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F.3d 1058, 1063 (1st Cir. 1993) (holding that absent
extraordinary circumstances, fact specific claims asserting
ineffective assistance of counsel are not cognizable on
direct appeal), cert. denied, 114 S. Ct. 1839 (1994).
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Accordingly, appellant's claim of inadequate assistance is
not properly before us.
C. SENTENCING.
1. The District Court's Loss Calculation.
Appellant argues that the district court erred in
determining the amount of loss. He does not contest the
district court's loss determination of $34,456.67 for count
7. However, he contends that there was no loss at all
involved in counts 1, 20, 21, and 22. Based on appellant's
own calculation, the district court should have adjusted the
base offense level upward by 4 levels to reflect a loss of
between $20,000.00 and $40,000.00, rather than 8 levels to
reflect a loss of between $200,000.00 and $350,000.00. We
find no basis for a remand.
The district court's loss determination of $137,217.00
for count 1 was based on appellant's portion of the
$350,000.00 loan, owing to Hartwell, which he failed to
disclose in Hartwell's bankruptcy documents. Appellant does
not dispute that he owed this amount to Hartwell. Instead,
he contends that there was no intended loss since it was not
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finally determined that the $137,217.00 was a loan and, thus,
a corporate asset, until some months after he filed
Hartwell's bankruptcy petition. He further argues that there
was no actual loss to creditors because Hartwell's assets, at
least at the time of filing, exceeded its debts.
We think the district court could properly determine
that there was both an intended and actual loss of
$137,217.00. The court could find an intended loss of
$137,217.00 because appellant continued to conceal this asset
even after, by his own admission, the final accounting
determination was made. The court could find an actual loss
of $137,217.00 because, independent of any loss to creditors,
that much remained owing to the debtor and bankruptcy estate
at the time of sentencing. See United States v. Edgar, 971
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F.2d 89, 95 (8th Cir. 1992) (recognizing that in bankruptcy
fraud, the three entities that can be injured are the debtor,
the bankruptcy estate, and the creditors).5
The district court's loss determination of $26,758.26 on
count 20 was based on the value of the Keystone shares
appellant failed to disclose in his personal bankruptcy
documents. Appellant does not dispute the value of these
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5. There might be some complications with the loss finding
because of appellant's own stake in Hartwell, although we
think those complications might be answered in this case.
The issue need not be pursued because appellant does not
advance his ownership interest in Hartwell as a ground for
limiting the amount of loss.
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shares. Rather, he argues that there was no loss since he
disclosed the Keystone Fund to the bankruptcy court in
February 1993, two months before his indictment. We think
the district court could properly find an intended loss of
$26,758.26 for the same reasons, discussed above, that it
could properly find an intent to defraud.
Since appellant did not object at sentencing to the loss
determination of $5,206.89 on count 21, we review only for
plain error. Fed. R. Crim. P. 52(b). Based on facts which
were uncontested below, the court was entitled to find that
appellant concealed his one hundred per cent ownership of
Bass River Management, Inc. when filing for personal
bankruptcy, and that he later transferred this amount from
Bass River for his personal use.6 Under the circumstances,
there was no plain error in determining the loss to be $
5,206.89.
We need not reach appellant's argument that the district
court erred in finding a loss of $25,000 on count 22. The
total amount of loss involved in counts 1, 7, 20, and 22
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6. Appellant does attempt to dispute on appeal that he
transferred these funds from Bass River. This challenge
comes too late. We have repeatedly held that "facts stated
in presentence reports are deemed admitted if they are not
challenged in the district court." United States v.
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O'Connor, 28 F.3d 218, 222 (1st Cir. 1994) (quoting United
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States v. Bregnard, 951 F.2d 457, 460 (1st Cir. 1991)). We
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add that the documents appellant cites, copies of canceled
checks written on Bass Rivers' account, are not part of the
record on direct appeal.
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already falls between $200,000.00 and $350,000.00.
Accordingly, any error in determining the loss for count 22
is harmless.
2. Restitution.
Appellant argues that the district court erred in
failing to determine that he could afford to make
restitution. He points out that he is currently without
employment and has limited assets. Since this issue was not
preserved below, we review for plain error. When issuing a
restitution order, the district court must "consider" the
financial condition of the defendant. 18 U.S.C. 3664(a).
However, there is no requirement that the defendant be found
able to pay now. United States v. Lombardi, 5 F.3d 568, 573
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(1st Cir. 1993). Appellant is well-educated and worked
successfully for many years. There is every reason to expect
that he will be gainfully employed in the future even if he
is unable to return to the practice of law. Significantly,
the district court left the payment schedule to be determined
by probation. We are satisfied that the district court
considered appellant's financial situation, and that it did
not abuse its considerable discretion. Accordingly, we find
no plain error in the court's restitution order.
Affirmed.
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