Filed: Sep. 14, 2005
Latest Update: Feb. 21, 2020
Summary: F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS September 14, 2005 TENTH CIRCUIT PATRICK FISHER Clerk UNITED STATES OF AMERICA, Plaintiff - Appellee, v. No. 03-1435 (D. Colorado) JOHN G.G. KREGAS, (D.Ct. No. 03-CR-92-M) Defendant - Appellant. ORDER AND JUDGMENT * Before SEYMOUR, LUCERO, and O’BRIEN, Circuit Judges. After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determi
Summary: F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS September 14, 2005 TENTH CIRCUIT PATRICK FISHER Clerk UNITED STATES OF AMERICA, Plaintiff - Appellee, v. No. 03-1435 (D. Colorado) JOHN G.G. KREGAS, (D.Ct. No. 03-CR-92-M) Defendant - Appellant. ORDER AND JUDGMENT * Before SEYMOUR, LUCERO, and O’BRIEN, Circuit Judges. After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determin..
More
F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
September 14, 2005
TENTH CIRCUIT
PATRICK FISHER
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 03-1435
(D. Colorado)
JOHN G.G. KREGAS, (D.Ct. No. 03-CR-92-M)
Defendant - Appellant.
ORDER AND JUDGMENT *
Before SEYMOUR, LUCERO, and O’BRIEN, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
John G.G. Kregas was convicted of making a false statement and aiding and
abetting the same in violation of 18 U.S.C. §§ 2 and 1014. He was sentenced to
*
This order and judgment is not binding precedent except under the doctrines of
law of the case, res judicata and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
twenty-one months imprisonment. Kregas appeals arguing his sentence is
unconstitutional under Blakely v. Washington, 124 S. Ct. 2531 (2004) 1. Exercising
jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a), we affirm.
I. Factual Background
In 1995, Kregas, Roger Howard and Pierre Coleman formed Online
Marketing Solutions (Online) in Colorado. 2 In late 1996, Online began selling
custom-made golf clubs under the name Executive Golf Unlimited. 3 The golf
clubs were sold by telemarketers hired by Online. If a customer wished to buy the
golf clubs, the telemarketer would record the customer’s credit card information
and transfer this information to Online for processing. Initially, Online used
other companies to process its credit card sales. However, because these
companies charged Online for this service, Kregas and Howard decided they
wanted to obtain their own merchant account. 4 Therefore, in early 1997, Howard
1
We also consider the impact of United States v. Booker, 125 S. Ct. 738 (2005).
See infa, n. 18.
2
Kregas served as President, Howard as Vice-President, Coleman as Secretary and
Buck Whatley as Treasurer. However, Online employees considered Kregas and Howard
to be “in charge” of the company.
3
Online sold a full set of golf clubs for approximately $1,000, a set of woods for
$650 and a set of irons for $350. Originally, the clubs were manufactured by an
individual in Arizona. However, because of their poor quality, Online eventually began
assembling the clubs itself.
A merchant account allows a company to accept credit cards from its customers.
4
A company obtains a merchant account from a bank. When a credit card sale is made, the
-2-
contacted Brian Bourjaily, an independent sales representative of credit card
processing services, who referred Howard to Luke Anastasakis, the owner of
Merchant Services International (Merchant Services), a company that assists
merchants in obtaining credit card processing capabilities.
Anastasakis and Bourjaily determined they would obtain Online’s merchant
account through Northeast Merchant Services (NEMS), an Independent Sales
Organization 5 associated with Chittenden Bank (Chittenden) in Vermont. They
provided Howard with a merchant account application. NEMS rejected Online’s
initial application because Kregas, the sole signer/guarantor, had insufficient
credit. Therefore, NEMS provided Online with a new application, instructing it
that someone with sufficient credit involved with the company would have to sign
it.
In February 1997, Online submitted a second application to NEMS. The
cardholder’s bank issues an authorization stating the account is in good standing and there
is sufficient credit for the purchase. Once an authorization is received, the bank holding
the company’s merchant account credits that account and the money is then automatically
transferred into the company’s checking account (called an operating account) for the
company’s use. The bank may also require the company to set-up a reserve account,
which is initially funded by the company. In addition to this initial deposit, the reserve
account is continually funded with a certain percentage of the company’s credit card
sales. The purpose of the reserve account is to cover any chargebacks that may occur
which the company cannot cover with its operating account.
5
The term Independent Sales Organization was formulated by VISA to describe an
organization which is not a bank but is associated with a bank to provide credit card
processing services.
-3-
second application was signed by Kregas and identified him as Online’s President
and a twenty percent shareholder. The application also contained the forged
signature of Jessica Onesty, Howard’s mother-in-law, and falsely indicated Onesty
was Online’s “CEO” and a thirty-one percent shareholder. The application’s
personal guarantee form bore Kregas’ signature and Onesty’s forged signature. 6
Based on Onesty’s credit-worthiness, NEMS approved the application and
forwarded it to Chittenden. 7 Chittenden in turn approved the application,
conditioned on Online opening a reserve account with a minimum deposit of
$10,000 and an operating account. On March 10, 1997, Chittenden sent a letter
addressed to Kregas informing him of its conditional approval and enclosing a
reserve account agreement and a signature card for the operating account. Kregas
signed the reserve account agreement and he and Howard signed the operating
account’s signature card. The agreement and card were returned to Chittenden
6
Chittenden’s underwriting guidelines required at least fifty-one percent of a
company’s ownership to guarantee a merchant account. If the company became liable to
Chittenden and could not pay, Chittenden held the guarantors personally liable.
7
Online also provided NEMS with copies of Kregas’ and Onesty’s driver’s
licenses, its 1996 tax return and its financial statements. Both the tax return and financial
statements overstated Online’s financial situation. Specifically, the financial statements
falsely indicated Online had five million in assets, and the tax return (which was never
filed with the IRS) stated Online had gross receipts/sales of $3,206,122 in 1996. The tax
return was signed by Kregas and also contained the forged signature of “R.J. Clark
C.P.A.” (R. Vol. VI at 433.) Clark testified at trial, stating he knew Kregas because
Clark’s wife and Kregas’ mother were good friends. He testified he never prepared or
signed the 1996 tax return.
-4-
along with a $10,000 check signed by Kregas to be deposited into the reserve
account.
Thereafter, Chittenden opened a merchant account for Online, and Online
began processing its credit card sales through this account. Each credit card sale
resulted in a credit to the account. Once it entered the merchant account, the
amount of the sale was immediately transferred to Online’s operating account,
which was a checking account. Once the money was deposited into its operating
account, Online would wire the money to its bank in Colorado for its use. 8 Between
March 26, 1997, and April 10, 1997, Online authorized a series of wire transfers
from its operating account to its Colorado bank. All of the wire transfer
authorizations contained Kregas’ signature but only a few of them were actually
signed by him, the remainder having been signed by other Online employees.
Beginning in June 1997 and continuing through September 1997, Online
began receiving a number of chargebacks 9 due to non-delivery or unacceptability of
its golf clubs and its failure to issue refunds. 10 In response to these chargebacks,
8
Although Chittenden required Online to have an operating account, it did not
require it to use that account to pay its bills.
9
A chargeback occurs when a credit card holder disputes a transaction and
requests his credit card company to investigate and obtain a refund. In essence, when a
chargeback occurs, it reverses the process that took place at the time of the credit card
sale.
10
Online provided a ninety-day refund policy on its golf clubs.
-5-
Chittenden debited Online’s operating account, eventually resulting in an overdraft
to the account. One of NEMS’s owners, Aaron Dewar, contacted Howard and
Kregas concerning the situation. Dewar informed them NEMS would be attempting
to recover the money from the guarantors on the merchant account application. In
response, Kregas “vehemently” stated he did not want NEMS contacting Onesty. 11
(R. Vol. V at 283.)
Chittenden eventually closed Online’s merchant account. As a result of the
chargebacks and Online’s inability to cover them, Chittenden lost approximately
$320,785.64.
II. Procedural Background
On February 25, 2003, Kregas and Howard were charged by indictment with
knowingly making a false statement and report for the purpose of influencing
Chittenden to approve Online’s merchant account application and aiding and
abetting the same in violation of 18 U.S.C. §§ 2 and 1014. 12 Specifically, the
indictment alleged Kregas and Howard falsely indicated on the merchant account
application that Onesty was Online’s CEO and that she personally guaranteed the
11
Dewar testified Kregas was “very anxious that we not contact [Onesty] and he
said it very forcefully.” (R. Vol. V at 283-84.)
12
The six-year delay between the offense and indictment was due to the fact that
the case originated as a telemarketing fraud investigation by the City of Aurora Police
Department based on customer complaints concerning Online. The case was eventually
turned over to the FBI and the focus of the investigation turned to the merchant account
application.
-6-
performance of the merchant account. On May 21, 2003, the government re-charged
Howard with conspiracy to make a false statement and report for the purpose of
influencing Chittenden to approve Online’s merchant account application. Howard
pled guilty and was sentenced to fifteen months imprisonment. Kregas proceeded to
trial on July 7-10, 2003.
At trial, Onesty testified she never signed the merchant account application,
never agreed to serve as a guarantor of the merchant account, was not Online’s
CEO, did not own Online stock and never provided her driver’s license to anyone at
Online. 13 Beverly Mazur, a Questioned Documents Examiner for the City of Aurora
Police Department, testified she compared Onesty’s signature on the application
with her known signature and concluded the signature on the application was a
simulation of her actual signature. However, Mazur could not determine who forged
Onesty’s signature, including whether Kregas was the forger. Several individuals
familiar with Kregas’ handwriting testified the merchant account application
contained Kregas’ handwriting and Kregas himself admitted he completed most of
13
On February 11, 1997, Onesty did co-sign with Online on a car lease for a Ford
Explorer. The vehicle was to be used by both Howard and his wife Diedra (Onesty’s
daughter). Onesty testified she met Kregas and another individual at the car dealership to
consummate the lease. While there, Onesty provided the salesperson with her driver’s
license in order for him to make a copy of it. When the transaction was completed, the
salesperson provided Onesty with a set of the lease’s paperwork which she in turn gave to
Kregas. Although she assumes a copy of her driver’s license was contained within that
paperwork, she did not see it. With this testimony, the government attempted to create an
inference that Kregas had access to a copy of Onesty’s driver’s license.
-7-
the application, albeit at Howard’s direction. Stacey Baldwin, the Online Marketing
employee who witnessed the signatures on the application, testified Onesty’s
signature was not on the application at the time she signed as a witness and in fact,
the space where Onesty’s signature appeared was blank. In explaining the blank
signature line, Baldwin stated Kregas told her he had forgotten a signature and
would have Coleman (Online’s Secretary) sign it. Tye Walton, another Online
Marketing employee, testified Kregas had admitted to him that he had signed
Onesty’s name to the application. Eileen Smith, the Chittenden underwriter who
approved Online’s second application, testified she would not have approved the
application if Onesty had not been listed as a personal guarantor because Kregas’
credit history did not meet the bank’s standards. 14
Kregas testified in his own defense and attempted to shift the blame to
Howard. During his testimony, he denied signing Onesty’s name on the application.
14
The government also presented Rule 404(b) evidence which included several
Online business documents containing forged signatures. One of these documents, a
commercial credit application for the rental of office furniture, contained the forged
signature of William H. Pelham, Howard’s wife’s great-uncle. Coleman (Online’s
Secretary) testified he heard Kregas admit to signing Pelham’s name on the application,
and Buck Whatley (Online’s Treasurer) testified he saw a copy of Pelham’s driver’s
license in Kregas’ office. Whatley also testified Kregas had performed computer work
for Pelham at Pelham’s home, thereby implying that Kregas had access to Pelham’s
personal information. At trial, Kregas denied signing Pelham’s name on the furniture
rental application. Another document, an application for an electronic funds transfer
account with eFunds Corporation, contained Onesty’s name and personal information (In
fact, Onesty’s name was misspelled on the form as “Honesty.”) The individual who set
up this account for Online, Joseph Bertucci, testified he dealt with Kregas in setting it up.
-8-
He testified Howard had asked Onesty to co-sign on the merchant account and that
Onesty had agreed. He further stated that at the time the application was being
completed, Howard was in the process of making Onesty “CEO” of Online and a
thirty-one percent owner. Although he admitted to filling out the application, he
stated he provided the completed application to Howard and told Howard to get
Onesty to sign it. He also denied ever preparing or submitting the false financial
statements and 1996 tax return to NEMS.
The jury found Kregas guilty. A presentence investigation report (PSR) was
prepared. 15 Applying USSG §2F1.1(a), the guideline applicable for a violation of 18
U.S.C. § 1014, the probation officer determined Kregas’ base offense level was 6.
However, because the amount of loss to Chittenden was between $200,000 and
$350,000, the officer increased the base offense level by eight levels pursuant to
USSG §2F1.1(b)(1)(I). The officer also added two levels pursuant to USSG
§2F1.1(b)(2) because the offense involved more than minimal planning. Based on a
total offense level of 16 and a criminal history category of I, the probation officer
calculated the guideline range as twenty-one to twenty-seven months imprisonment.
He also recommended Kregas be ordered to make restitution in the amount of
$171,015.52 to Chittenden, $1,355.97 to NEMS and $148,414.15 to Merchant
15
Kregas was sentenced pursuant to the 1995 edition of the United States
Sentencing Guidelines Manual to avoid any ex post facto issues. All citations to the
guidelines in this opinion refer to the 1995 guidelines unless otherwise indicated.
-9-
Services. 16
Kregas raised several objections to the PSR. First, he argued that the
evidence at trial demonstrated that most of the wire transfer authorizations Online
submitted to Chittenden were not actually signed by Kregas. Because the
authorizations actually signed by Kregas only totaled $110,000, Kregas alleged the
net loss to Chittenden as a result of his “relevant conduct” was $100,000 (after
crediting the $10,000 deposit made to the reserve account). Thus, Kregas argued his
base offense level should only be increased six levels pursuant to USSG
§2F1.1(b)(1)(G) (authorizing a six level increase if the amount of loss falls between
$70,000 and $120,000). Kregas also objected to the PSR based on its failure to
provide him with a three level reduction under USSG §3B1.2 based on his role in
the offense, which he claimed to be between a minimal and minor role. 17 He argued
that the evidence at trial established Howard was the individual responsible for
setting up Online’s merchant account and submitting the merchant account
application to Chittenden. He further emphasized that the majority of the loss to
Chittenden resulted from wire transfer authorizations submitted to Chittenden
The record reflects Merchant Services reimbursed Chittenden for part of its loss.
16
Apparently, NEMS also reimbursed Chittenden.
17
USSG § 3B1.2(a) provides a four level reduction if the defendant was a minimal
participant and USSG § 3B1.2(b) provides a two level reduction if the defendant was a
minor participant. In cases falling between subsections (a) and (b), USSG § 3B1.2
provides for a three level reduction.
-10-
without Kregas’ knowledge or consent. Lastly, Kregas sought a downward
departure for aberrant behavior pursuant to USSG §5K2.20 based on his lack of a
criminal history and his post-offense conduct (which included six years of continual
self-employment and no criminal activity).
The district court rejected Kregas’ arguments. As to the amount of loss, it
noted Kregas was not objecting to the amount of restitution and concluded Kregas
was responsible for the total amount of loss resulting from the merchant account’s
existence ($320,785.64), regardless of whether he signed the wire transfer
authorizations. As to Kregas’ role in the offense, the court did not agree it was
minimal or minor and found Howard and Kregas had an “equal[]” role in completing
and submitting the false merchant account application. (R. Vol. IX at 8.) The court
also denied Kregas’ request for a downward departure based on aberrant behavior.
Adopting the recommendations in the PSR, the court sentenced Kregas to twenty-
one months imprisonment. It also ordered Kregas to pay restitution in the amount of
$320,785.64, to be paid jointly and severally with Howard. This appeal followed.
III. Discussion
Kregas asserts his sentence, imposed pursuant to the mandatory federal
sentencing guidelines and enhanced pursuant to judge-found facts, violates the Sixth
-11-
Amendment under Blakely and Booker. 18 Although Kregas raised sentencing
objections in the district court, those objections did not include a Sixth Amendment
violation. Thus, we review for plain error. United States v. Dazey, 403 F.3d 1147,
1173-74 (10th Cir. 2005) (holding that although the defendant contested at
sentencing the evidentiary basis of the judge-found facts, because he did not raise a
Sixth Amendment violation below, plain error review applied); see also United
States v. Gonzalez-Huerta,
403 F.3d 727, 730 (10th Cir. 2005) (en banc) (applying
plain error review due to defendant’s failure to raise Booker in the district court).
To establish plain error, Kregas must demonstrate there is (1) error, (2) that is plain
and (3) the error affects his substantial rights.
Dazey, 403 F.3d at 1174; Gonzalez-
Huerta, 403 F.3d at 732. If these three prongs are met, we may exercise our
discretion to correct the error if Kregas establishes “the error seriously affects the
fairness, integrity, or public reputation of judicial proceedings,” i.e. the fourth prong
of plain error review.
Dazey, 403 F.3d at 1174; see also
Gonzalez-Huerta, 403 F.3d
at 736-37.
18
Kregas did not raise Booker in a formal brief. However, on January 24, 2005, he
filed a FED. R. APP. P. 28(j) letter citing two appellate court cases interpreting and
applying Booker in his favor. Although we normally do not consider arguments raised
for the first time in a Rule 28(j) letter, see United States v. Lindsey, 389 F.3d 1334, 1335
n.1 (10th Cir. 2004), Kregas did raise the Sixth Amendment issue pursuant to Blakely in
his opening and reply briefs. This is sufficient to invoke the Sixth Amendment holding in
Booker as well. Consequently, we will apply the Sixth Amendment analysis of both
Booker and Blakely to this case.
-12-
A. Defining the Error
In Booker, the Supreme Court extended its holding in Blakely to the federal
sentencing guidelines, holding that the Sixth Amendment requires “[a]ny fact (other
than a prior conviction) which is necessary to support a sentence exceeding the
maximum authorized by the facts established by a plea of guilty or a jury verdict
[to] be admitted by the defendant or proved to a jury beyond a reasonable doubt.”
Booker, 125 S. Ct. at 756. To remedy the constitutional infirmity of the guidelines,
Booker invalidated their mandatory nature, requiring the district court to consult
them in an advisory fashion.
Id. at 756-57 (severing and excising 18 U.S.C. §§
3553(b)(1), 3742(e)). In Gonzalez-Huerta, we determined there were two types of
error a district court could commit prior to
Booker. 403 F.3d at 731. The first,
referred to as “constitutional Booker error,” occurs when the district court relies
upon judge-found facts (other than a prior conviction) to enhance a defendant’s
sentence mandatorily, a practice proscribed by the Sixth Amendment.
Id. The
second type of error, referred to as “non-constitutional Booker error,” results when
the district court applies the guidelines in a mandatory rather than advisory fashion,
even though the resulting sentence was calculated based solely upon facts admitted
by the defendant or found by a jury.
Id. at 731-32. Because the parties dispute what
type of error was committed below, we must first define the error.
Kregas asserts the error in this case was “constitutional Booker error” because
-13-
his sentence was enhanced based on the district court’s fact-finding, specifically
that the amount of loss was between $200,000 and $350,000 and the offense
involved more than minimal planning. The government contends no Sixth
Amendment violation occurred. It alleges the amount of loss was a legal
determination, specifically, whether Kregas could be held responsible under the
guidelines’ relevant conduct provision (USSG §1B1.3) for those losses caused by
the wire transfer authorizations signed by his co-workers. As to the enhancement
for more than minimal planning, the government contends Kregas waived any
Blakely argument by failing to make any objection to the enhancement at sentencing
and not challenging it on appeal. In his reply brief, Kregas disagrees with the
government’s assertion that the amount of loss issue was a legal determination. He
contends that in ascertaining the amount of loss under USSG §2F1.1, the district
court was required to decide whether the actions of his co-workers in forging his
signature to the wire transfer authorizations were “reasonably foreseeable” to him
under the relevant conduct provision of USSG §1B1.3. Because “reasonable
foreseeab[ility]” is a fact question, not a legal one, Kregas maintains the amount of
loss enhancement was the result of judicial fact-finding and therefore, in violation
of the Sixth Amendment.
As to the amount of loss enhancement, we agree with the government that no
Sixth Amendment violation occurred. Kregas’ objection at sentencing to the amount
-14-
of loss was based on his argument that he could only be held responsible for the
amount of loss resulting from the wire transfer authorizations he signed. His
argument was rejected based on the district court’s legal interpretation of USSG
§2F1.1 and §1B1.3. Specifically, the court determined it was “the existence of the
account that resulted in the losses, whether he sent the wire transfer authorizations
or not.” (R. Vol. IX at 8.) Although Kregas attempts to rely on the “reasonable
foreseeab[ility]” language in the guidelines’ relevant conduct provision, this
language pertains to cases involving jointly undertaken criminal activity. See USSG
§1B1.3(a)(1)(B) (“[I]n the case of a jointly undertaken criminal activity . . .
[relevant conduct includes] all reasonably foreseeable acts and omissions of others
in furtherance of the jointly undertaken criminal activity.”). However, as the
Commentary to §1B1.3 states: “The requirement of reasonable foreseeability
applies only in respect to the conduct . . . of others under subsection (a)(1)(B). It
does not apply to conduct that the defendant personally undertakes, aids, abets,
counsels, commands, induces, procures, or willfully causes; such conduct is
addressed under subsection (a)(1)(A).” USSG §1B1.3, comment. (n. 2). Here,
Kregas was convicted of personally aiding and abetting the submission of the false
application to Chittenden. Therefore, as the district court legally concluded,
§1B1.3(a)(1)(A), rather than §1B1.3(a)(1)(B), was the pertinent “relevant conduct”
provision and Kregas was responsible for the total amount of loss to Chittenden
-15-
resulting from the merchant account, which was obtained solely due to the
submission of the false application. Kregas admitted this loss was $320,785.64.
(See R. Vol. I, Doc. 68 at 3; Vol. IX at 7.) Consequently, no Sixth Amendment
violation resulted concerning the amount of loss because an eight-level enhancement
under USSG §2F1.1(b)(1)(I) was authorized by the guilty verdict and Kregas’
admissions.
Additionally, no Sixth Amendment violation occurred as to the more than
minimal planning enhancement. 19 In this case, if the two-level enhancement for
more than minimal planning had been omitted from the court’s guideline
calculations, the applicable offense level would have been 14, resulting in a
guideline range of fifteen to twenty-one months imprisonment. Kregas received a
twenty-one month sentence—a sentence the district court could have imposed
without the more than minimal planning enhancement. Therefore, no constitutional
error occurred as a result of this enhancement. See United States v. Yazzie, 407 F.3d
1139, 1144 (10th Cir. 2005) (en banc) (“Booker made clear that it is the actual
sentence, not the sentencing range, that must not be increased based upon judge-
19
Contrary to the government’s argument, Kregas has not waived a
Blakely/Booker challenge to the more than minimal planning enhancement. That he
failed to object to this enhancement at sentencing based on the Sixth Amendment does
not constitute a waiver; rather, his failure to preserve the issue at the district court limits
our review to plain error. Also, Kregas’ Blakely argument on appeal applied to both the
amount of loss and more than minimal planning enhancements.
-16-
found facts in order to violate the Sixth Amendment . . . .”).
Although there was no Sixth Amendment violation in this case with respect to
the amount of loss and more than minimal planning enhancements, the district court
did apply the guidelines in a mandatory fashion. Therefore, the district court
committed “non-constitutional Booker error” at sentencing. Having defined the
error, we now proceed with the plain error analysis.
B. Plain Error Analysis
Obviously, the first and second prongs of the plain error standard are met. As
stated above, the district court committed “non-constitutional Booker error” based
on its mandatory application of the guidelines. Second, the error is “plain” because
Booker renders the error both clear and obvious on appeal. Gonzalez-Huerta, 403
F.3d at 732. The question then is whether Kregas can satisfy the third and fourth
prongs of plain error review.
Under the third prong, Kregas must show that the error affects his substantial
rights, that is, “the error must have been prejudicial: It must have affected the
outcome of the district court proceedings.” Dazey, 403 F.3d at 1175 (quotations
omitted). However, we need not decide whether Kregas has satisfied the third prong
of the plain error standard because, even if he has, we conclude he has not met the
fourth prong. See
Gonzalez-Huerta, 403 F.3d at 736 (concluding it was not
necessary to determine whether the third prong of the plain error test was met
-17-
because the fourth prong must also be satisfied to obtain relief and the fourth prong
was not met).
“Under the fourth prong of plain-error review, a court may exercise its
discretion to notice a forfeited error only if it seriously affects the fairness,
integrity, or public reputation of judicial proceedings.” Id. If “non-constitutional
[Booker] error” is involved, as in this case, the standard for satisfying the fourth
prong is “demanding”—the defendant must show that the error is “particularly
egregious” and that our failure to notice it would result in a “miscarriage of justice.”
Dazey, 403 F.3d at 1178 (citation & quotations omitted);
Gonzalez-Huerta, 403 F.3d
at 736-37. We have recognized that in most cases involving “non-constitutional
Booker error” the defendant will be unable to satisfy the fourth prong. See United
States v. Trujillo-Terrazaz,
405 F.3d 814, 820-21 (10th Cir. 2005) (recognizing
difficulty in establishing fourth prong in cases involving “non-constitutional Booker
error” but finding that defendant had met fourth prong). This case is no exception.
Kregas received a sentence within the national norm as established by the
guidelines and there is no evidence supporting a lower sentence. See Gonzalez-
Huerta, 403 F.3d at 738-39 (considering in fourth prong analysis whether the
defendant received a sentence within the guidelines/national norm and whether the
record supported a lower sentence). At sentencing, Kregas sought a three-level
downward adjustment based on his role in the offense and a downward departure
-18-
based on aberrant behavior. In support of his downward departure motion, Kregas
emphasized his law-abiding life since the offense and the absence of any criminal
history other than some non-moving traffic violations. Despite recognizing its
authority to apply a downward adjustment and/or to downward depart, the court
chose not to do so. Although a court’s authority to depart downward pre-Booker
was more constrained than it is post-Booker, we find the district court’s explicit
decision not to exercise its pre-Booker discretion compelling. See United States v.
Lawrence, 405 F.3d 888, 908 (10th Cir. 2005) (finding that the district court’s
refusal to depart downward is further evidence the court felt the seventy-two month
sentence was appropriate and that it would have imposed the same sentence under
an advisory guidelines scheme).
Equally compelling are the district court’s statements at sentencing. In
relevant part, the court stated:
Mr. Kregas, before I do the formal sentencing, I’ll tell you what I
think. My obligation is to be candid also. I don’t believe your
testimony. The jury didn’t believe your testimony, and I don’t either.
....
But, the bottom line, as you refer to it, in business is honesty. . . .
[C]ommercial transactions require . . . that people . . . are honest. The
whole country runs on credit, and the people who extend hard dollars
have to be able to rely on what they’re told as to what their risks are.
Now, I am going to punish you with a 21 month sentence because
you’re dishonest. It’s not that you’re a bad man. I believe what is in
-19-
these letters, except[] for one thing, trustworthiness.
[W]e have these guidelines, and they represent the considered
judgment of not only the Sentencing Commission, but [] Congress . . .
.
The fundamental [policy] that was behind them . . . is . . . look,
people who commit crimes have to be punished according to these
categories that are established. . . .
....
[W]hat really was one of the motivations for establishing the
Commission and the guidelines is that judges, in the view of
Congress, were inconsistent with themselves and also among judges,
and there was a great concern that people . . . who otherwise were
fine people were getting off. They weren’t being punished. Other
people who didn’t present such a good background were getting
punished too much.
Now, its not a question of the individual so much anymore under the
law. It’s a question of what you did. You get punished for what you
did, no[] matter who you are. . . .
So, that’s the spirit in which I’m imposing this sentence. I believe
you to be a good man. I believe that you come from a fine family,
and that this is inconsistent with your . . . life otherwise. But, . . .
you’re going to appeal this, I’m sure, so, . . . I’m just telling you what
I think. . . . I have to punish the crime.
....
People in your very same situation have to know if you make this kind
of a move, you’re going to do time, just like bank robbers and drug
traffickers and everybody else.
(R. Vol. IX at 20-23.)
None of these statements express a dissatisfaction with Kregas’ sentence;
-20-
indeed, it appears the district court felt a twenty-one month sentence was
appropriate. Therefore, there is no indication the district court would impose a
significantly different sentence under an advisory sentencing system. See
Lawrence, 405 F.3d at 907 (“Whether the district court would simply reimpose the
same sentence on remand, or whether instead the sentence ‘would likely change to
a significant degree if [the case] were returned to the district court for discretionary
resentencing,’ is one factor to consider in determining whether the defendant can
satisfy the fourth plain-error prong.”) (quoting
Gonzalez-Huerta, 403 F.3d at 743-
44 (Ebel, J., concurring)).
Moreover, these statements demonstrate a consideration and rejection of a
majority of the factors listed in 18 U.S.C. § 3553(a), including “the history and
characteristics of the defendant” and the need for the sentence imposed to “reflect
the seriousness of the offense,” “promote respect for the law,” “provide just
punishment” and “afford adequate deterrence.” See Booker, 125 S. Ct. at 764
(“Without the ‘mandatory’ provision, the [Sentencing Reform Act of 1984]
nonetheless requires judges to take account of the Guidelines together with other
sentencing goals” contained in 18 U.S.C. § 3553(a).). Having rejected these factors
once, there is no reason to believe the district court would now consider them
sufficient enough to warrant a lower sentence. Therefore, declining to notice the
Booker error in this case would not offend core notions of justice. Based on the
-21-
above, Kregas fails to satisfy the fourth prong of plain error review; thus, we
decline to exercise our discretion to correct the error below.
IV. Conclusion
Having failed to satisfy plain-error review, Kregas’ sentence is AFFIRMED.
Entered by the Court:
Terrence L. O’Brien
United States Circuit Judge
-22-
