08-0673-cr
U.S. v. Labbe



                         UNITED STATES COURT OF APPEALS

                             FOR THE SECOND CIRCUIT

                                August Term 2009

Heard: October 16, 2009                            Decided: December 4, 2009

                             Docket No. 08-0673-cr

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UNITED STATES OF AMERICA,
          Appellee,

                    v.

KENNY OLA LABBE,
          Defendant-Appellant.
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Before: NEWMAN, POOLER, and KATZMANN, Circuit Judges.

        Appeal from the January 31, 2008, judgment of the United States

District Court for the Southern District of New York (Robert W. Sweet,

District Judge) sentencing the defendant to 87 months’ imprisonment

for interstate transportation of stolen property in violation of 18

U.S.C. § 2314.      Defendant contends that he was improperly denied a

minimal role adjustment that the District Judge had contemplated

giving in a written sentencing opinion. We conclude that the decision

not to impose the contemplated adjustment requires findings, and we

remand for that purpose.

        Remanded.
                                    Devin McLaughlin, Langrock Sperry &
                                      Wool, LLP, Middlebury, VT, for
                                      Defendant-Appellant.

                                    Seetha Ramachandran, Asst. U.S. Atty.,
                                      New York, N.Y. (Lev L. Dassin, Acting
                                      U.S. Atty., Iris Lan, Asst. U.S.
                                      Atty., New York, N.Y., on the brief),
                                      for Appellee.

JON O. NEWMAN, Circuit Judge.

       This sentencing appeal challenges a District Judge’s denial at a

sentencing hearing of a minimal role adjustment, U.S.S.G. § 3B1.2(a),

in making a Sentencing Guidelines calculation after the Judge had

stated in a carefully prepared “Sentencing Opinion” that the defendant

was entitled to the adjustment.             Kenny Ola Labbe, a citizen of

Nigeria, appeals from the January 31, 2008, judgment of the United

States District Court for the Southern District of New York (Robert W.

Sweet, District Judge), sentencing him principally to 87 months’

imprisonment upon his plea of guilty to interstate transportation of

stolen property, in violation of 18 U.S.C. § 2314.           Although we have

no desire to inhibit the commendable practice of issuing an indication

of a likely sentence in advance of a sentencing hearing, we conclude

that procedural error occurs when a defendant is not alerted to a

likely change from a judge’s anticipated Guidelines calculation and

when   that   change   is   not   sufficiently   supported   by   the   Judge’s

findings.     We therefore remand so that at a renewed sentencing

hearing, Labbe, now on notice that a minimal role adjustment is likely

                                      -2-
to be denied, can personally and through counsel make a full argument

for    such   an   adjustment   and    so    that   the   District   Judge,   after

considering both the Government’s and the defendant’s presentations

concerning that adjustment, make a fresh determination, supported by

appropriate findings, as to whether an adjustment is warranted.

                                     Background

       Labbe was indicted for transporting stolen property in interstate

commerce, in violation of 18 U.S.C. § 2314, and conspiracy to commit

that   offense,     in   violation    of    18   U.S.C.   §   371.   The   conduct

constituting the substantive offense was alleged to have occurred

between December 2005 and January 2006.             The conspiracy was alleged to

have spanned the interval between 2002 and January 2006.                      These

charges stemmed from an elaborate scheme to steal and cash checks sent

to a lockbox maintained by JP Morgan Chase Bank (“Chase”).                    Chase

account holders sent checks to the lockbox to be credited to their

accounts.     One of the conspirators stole quantities of checks from the

lockbox.      Another conspirator sent unsolicited e-mails to strangers

throughout the United States claiming to seek help to complete a

financial transaction.          Some of these strangers became unwitting

participants in the scheme by providing their names and addresses to

conspirators.       Conspirators removed the true payee’s name from a

stolen check and substituted the name of an unwitting participant.

The altered check was then mailed to the participant, who deposited

                                           -3-
the check in his own account and wired a portion of the proceeds to an

overseas bank account controlled by a conspirator.

     Labbe pled guilty to both counts of the indictment.   At the plea

colloquy before a Magistrate Judge, he acknowledged that his acts

constituted the elements of the charged offenses, but he asserted that

he had not acted “in the way” the offenses were detailed in the

indictment.   Questioned carefully by the Magistrate Judge, Labbe

stated that an individual had approached him and asked for help in

mailing some checks.   Labbe said an individual gave him a list of

names, and Labbe had to match the list with certain checks, place

addresses he had been given on envelopes, and send the checks from a

Federal Express office.   He was to do this during a brief interval

while the individual was out of the country.   Labbe admitted that he

knew the checks were stolen, but denied knowing they had been altered.

He subsequently told the Probation Department that he was promised

some indefinite form of payment, which he never received, and that he

pocketed only $400 that was left over from the funds given him to send

the checks.

     The Presentence Report (“PSR”) began the Guidelines calculation

with a base offense level of 6, see U.S.S.G. § 2B1.1(a)(2), added 20

levels for a loss greater then $7 million but less than $12 million,




                                 -4-
see 

added 4 levels because the offense involved

more than 50 victims, see 

and added 2 levels

because a substantial part of the offense was committed outside the

United States, see 

   Subtracting 3 levels for

acceptance of responsibility, see 

(b), the PSR arrived

at an adjusted offense level of 29, which, with Criminal History

Category III, yielded a sentencing range of 108 to 135 months.    The

PSR recommended a term of 108 months.

     After receiving sentencing submissions from the Government and

the defendant, Judge Sweet issued a 21-page “Sentencing Opinion,”

dated January 23, 2008.   Describing the offense conduct, Judge Sweet

wrote that Labbe and others “caused the stolen lockbox checks . . . to

be altered” and “removed the original payees’ names from the stolen

checks and replaced them with the names of participating e-mail

recipients,” that Labbe sent packages of stolen checks via Federal

Express to participating e-mail recipients, and that Labbe asked an

internet café owner to scan and e-mail a document that contained a

list of individuals, their contact information, and dollar amounts.

Judge Sweet also stated that a Federal Express employee had told an

FBI agent that Labbe had sent packages almost every weeknight from


     1
      The loss amount was determined by multiplying the amounts of the
checks Labbe sent on the day of his arrest, more than $500,000, by the
number of weeknights Labbe was observed sending packages from the
Federal Express office.

                                 -5-
December 25, 2005, to January 23, 2006.              Finally, Judge Sweet stated

that   various    pieces    of    paper   relating     to   the    scheme   had   been

discovered at Labbe’s residence.

       Using the 2007 Guidelines Manual, Judge Sweet calculated Labbe’s

adjusted offense level to be 23, following the PSR’s calculation with

one difference, which is relevant to this appeal.                 Judge Sweet wrote,

“Because the defendant’s role in the offense was minimal, he is

entitled to a mitigating role decrease of four levels, pursuant to

U.S.S.G. § 3B1.2(a).”        That subsection provides for a four-level

reduction of the offense level “[i]f the defendant was a minimal

participant in any criminal activity.”                 A two-level reduction is

authorized if      the defendant was a minor participant. See U.S.S.G.

§ 3B1.2(b).      In Criminal History Category III, the adjusted offense

level of 23 yielded a sentencing range of 57 to 71 months.                        Judge

Sweet then considered the factors identified in 18 U.S.C. § 3553(a),

determined that a Guidelines sentence was warranted, and concluded,

“For the instant offense, Labbe is hereby sentenced [sic] to a term of

57 months’ imprisonment and a term of supervised release of three

years.”    He also ordered forfeiture of $44 million of currency and

U.S. Postal Service money orders totaling approximately $25,000.

       Also relevant to this appeal is the concluding sentence of the

Sentencing    Opinion:     “The   terms    of   this   sentence     are   subject    to

modification at the sentencing hearing set for January 29, 2008.”

                                          -6-
     Prior to the sentencing hearing, the Government sent Judge Sweet

a letter, objecting to the Court’s contemplated four-level reduction

for a minimal role in the offense.      The Government pointed out that

Labbe’s offense level was based only on the loss resulting from his

own conduct in the conspiracy, i.e., mailing checks between December

25 and January 23.     Specifically with respect to the minimal role

reduction, the Government stated that Labbe had communicated with a

co-conspirator in Nigeria, had “tried to send him a list of names and

addresses that corresponded to people who were contacted through the

email scam,” and, when arrested, had various documents connected with

the scam.

     At the sentencing hearing, Judge Sweet first confirmed that

defense counsel had reviewed the PSR and the Judge’s Sentencing

Opinion with Labbe.   The Judge then afforded defense counsel and Labbe

an opportunity to speak.   Defense counsel primarily disputed the loss

calculation.   With respect to Labbe’s role, counsel first said, “I

think it is important to note that of all the people involved in this

conspiracy, Mr. Labbe really was the lowest on the rung.    I know that

your Honor takes that into consideration in a role adjustment,” and

later said, “Even though he has been given a role in the offense

adjustment, I don’t think that truly compensates for the large 20-

level increase that he is being given.” Labbe told the Judge, “I

really did play a very minute part in this.”

                                  -7-
     In response, the Government defended the loss calculation and

then said:

     I don’t think he can be characterized as a minor or minimal
     participant in this scheme. I think the evidence shows that
     he had an awareness of what was in the packages, who was
     getting these things, trying to fax the document to Nigeria
     at the Internet café, the evidence that was recovered from
     him when he was arrested, and also the $25,000 in money
     orders that was found at his residence after he was
     arrested.

     Judge Sweet then asked the prosecutor, “What is the government’s

view with respect to the relative participation of all three [Labbe

and two other defendants scheduled for sentencing in the Southern

District]?” The prosecutor ranked co-conspirator Ellis as the highest

because of his activity in buying the checks and deciding which ones

should   be   used   for   the   scam.         She   then   said   that   Labbe   had

participated in gathering the e-mail addresses and circulating them,

and ranked Labbe below Ellis but higher than co-conspirator Hailey,

the Chase employee who had stolen the checks from the lockbox.

     Labbe briefly responded, apparently endeavoring to dispute the

contention that he had gathered the e-mail addresses.                 He said that

someone had given him “an e-mail to go check.”

     Judge Sweet then imposed sentence.                He stated, “I think the

government’s argument and its reading of the guidelines with respect

to the minor and minimal participants is right.                    It is a correct

interpretation.” He then stated that he would impose a Guidelines


                                         -8-
sentence and apply a sentencing range of 87 to 108 months.                 This range

was apparently derived from an adjusted offense level of                     27 (the

originally contemplated level of 23 plus the rejected four-level

reduction for minimal role) and Criminal History Category III.                    Judge

Sweet imposed a sentence of 87 months’ imprisonment, using the bottom

of   the   applicable     range.     The    bottom    of    the    range   with     the

contemplated minimal role adjustment would have been 57 months.                     The

disallowance of the adjustment therefore raised the sentence by two

and one-half years.

      Defense   counsel    then    sought    to   argue    for    the   minimal   role

adjustment, stating that Labbe “had no independent decision-making.

He was told to pick up checks and he was told to take them to a mail

depository.     That is what he did.          He didn’t steal the checks. He

wasn’t an insider.      He was the person who was used by everybody else

to take the checks and mail them off.”               Judge Sweet responded, “I

understand.”

      After Judge Sweet imposed a forfeiture of $12 million, the

following occurred:

            THE DEFENDANT: Your Honor, your Honor, your Honor –

           MR. SEIDLER [defense counsel]: I spoke to Mr. Labbe
      downstairs and explained to Mr. Labbe your sentencing
      opinion and he is extremely upset now because he thinks I
      misled him because your Honor imposed a more severe sentence
      than the sentencing opinion.

           THE COURT: Yes, well, the sentencing opinion, Mr.
      Labbe, was one which I determined but I did not have the
      advantage of the government’s comments which I have received

                                       -9-
     afterwards and I changed my mind.

                                Discussion

     On appeal, Labbe challenges the disallowance of the minimal role

adjustment, contending that the District Court’s change from the

allowance of the adjustment in the sentencing opinion is not supported

by adequate findings.

     We have not previously encountered a sentence challenged on the

ground that it differs from the sentence contemplated in a judge’s

sentencing opinion issued after receipt of the PSR but prior to the

sentencing hearing.     Labbe makes no claim that the issuance of that

opinion impaired either his or his counsel’s right to be heard prior

to the imposition of sentence. See Fed. R. Crim. P. 32(i)(4)(A)(i),

(ii).   No doubt most sentencing judges have formulated a tentative

sentence after reading a PSR.    Judge Sweet’s issuance of a sentencing

opinion shares his tentative view with the parties and usefully

focuses their attention on matters worthy of dispute by written

submission or oral presentation.          At the same time, despite the

concluding disclaimer stating, “The terms of this sentence are subject

to modification at the sentencing hearing,” the sentencing opinion

understandably raised expectations, which were heightened by the

words, “For the instant offense, Labbe is hereby sentenced to a term

of 57 months’ imprisonment.”

     We consider first whether the District Judge, having issued a

sentencing opinion that included the definitive words “is hereby

                                   -10-
sentenced,”    should    have   alerted     the    defendant    to    the   distinct

likelihood    that   there   would   be    an     adverse   change,    notably   the

disallowance of the role adjustment.                The Supreme Court recently

considered an issue concerning appropriate notice from a sentencing

judge in a different context.        In Irizarry v. United States, 128 S.

Ct. 2198 (2008), the Court ruled that, once the Guidelines became

advisory, a sentencing judge need not give notice of an intention to

impose a non-Guidelines sentence.              Under the mandatory Guidelines

regime, the Court had ruled that a sentencing judge must notify the

parties of an intention to make an upward departure. See Burns v.

United States, 

, 138 (1991).

     The Court’s explanation in Irizarry               is instructive for our

situation.      First,   the    Court     noted,    “Now    faced    with   advisory

Guidelines, neither the Government nor the defendant may place the

same degree of reliance on the type of ‘expectancy’ that gave rise to

a special need for notice in Burns.” 

.

 The Court also said, “Sound practice dictates that judges in all

cases should make sure that the information provided to the parties in

advance of the hearing, and in the hearing itself, has given them an

adequate opportunity to confront and debate the relevant issues.” 

  We think that Judge Sweet’s sentencing opinion, as worded,

did present the defendant with an “expectancy” that gave rise to the

need for notice that a significant change was likely.                And such notice

was needed to provide the defendant with “an adequate opportunity” to

                                        -11-
oppose the contemplated change and argue for a role adjustment.

Indeed, the case for notice here is stronger than the one presented in

Burns. The defendant there knew from the Guidelines Manual, case law,

and established practice that an upward departure was available, but

the Court nevertheless ruled that he needed notice of a departure that

the judge was contemplating.       In the pending case, the defendant had

less reason to expect a change disallowing the role adjustment that

was included in the sentencing opinion than the defendant in Burns had

to expect an upward departure.           Such a change is likely to be more

infrequent    and   more    unexpected    than   were   departures   under   the

mandatory Guidelines regime.

     With    respect   to   the   merits    of   Labbe’s   claim   for   a   role

adjustment, we recognize the “very wide latitude” of sentencing judges

“to decide the proper degree of punishment for an individual offender

and a particular crime,” United States v. Cavera, 

, 188

(2d Cir. 2008) (in banc), and we also recognize that a district judge

has “discretion” in deciding whether to accord a defendant a role

adjustment. See United States v. Habbas, 

, 274 (2d Cir.

2008).   However, although our review is deferential, a sentencing

court “is required to make findings sufficient to permit appellate

review.” United States v. Legros, 

, 474 (2d Cir. 2008).

Moreover, just as a sentencing judge “must make specific findings as

to why a particular subsection of § 3B1.1 adjustment applies,” United

States v. Ware, 

, 451 (2d Cir. 2009), we think the judge

                                     -12-
must also make specific findings to support the denial of a role

adjustment that the judge had previously indicated to the parties an

intention to make.   Although all of the standards for judicial review

of administrative agency action are not necessarily transferable to

appellate review of district court sentences, we take some guidance

from the Supreme Court’s recent decision in F.C.C. v. Fox Television

Stations, Inc., 

(2009), concerning a change of

position by the Federal Communications Commission.     The Court there

observed that although “the agency need not always provide a more

detailed justification than what would suffice for a new policy

created on a blank slate, [s]ometimes it must--when, for example, its

new policy rests upon factual findings that contradict those which

underlay its prior policy.” 

(punctuation altered).

     In the pending case, Judge Sweet initially described Labbe’s

conduct as sending the altered checks from a Federal Express office

almost every weeknight during a four-week span and trying to fax to an

individual in Nigeria a document with names, addresses, and amounts,

a document Labbe subsequently arranged to have electronically scanned

and e-mailed.    Judge Sweet also wrote in his sentencing opinion that

Labbe and others altered the names of the original payees from the

stolen checks.     Despite this conduct, and it is not clear what

evidence supports the assertion that Labbe altered payees’ names, the

Judge tentatively concluded that Labbe’s role was “minimal,” entitling

him to a four-level role reduction.   In deciding not to make the four-

                                 -13-
level reduction, the Judge said that he agreed with the Government’s

“argument” and “its reading of the guidelines with respect to the

minor and minimal participants,” and that he had changed his mind.                     We

are left uncertain whether the Judge (a) attributed to Labbe more

misconduct than he had originally found, and, if so, what misconduct,

or (b) was interpreting the relevant guideline differently than

before, or (c) was simply reassessing the significance of Labbe’s

misconduct on the same facts and same understanding of the guidelines

as before.          We note that the Government argued to the Judge at the

sentencing hearing that Labbe had “participated in the gathering of

the e-mail addresses,” but it is unclear what evidence supports that

assertion and whether Judge Sweet believed that this assertion was

true.

     Under all the circumstances, we conclude that the case should be

remanded so that the District Court may conduct a new sentencing

hearing, afford the defendant and his counsel, now alerted to the

Judge’s          inclination    not   to   accord   a   role    adjustment,    a     full

opportunity to argue for the adjustment, and then determine, on the

basis       of    appropriate    findings,   whether    to     make   a   minimal    role

adjustment, a minor role adjustment, or no adjustment.2                             If an


        2
      Since we are remanding for further findings, we need not
determine the standard of review appropriate for the ultimate decision
as to whether a role adjustment will be made. We have recognized that
“[t]his circuit has not always been consistent in describing the
standard of review for [role adjustments],” United States v. Gotti,

, 349 (2d Cir. 2006), as the following decisions

                                           -14-
adjustment is warranted, the sentence should be modified accordingly.

                              Conclusion

     The case is remanded for further proceedings consistent with this

opinion.   After resentencing, any party may restore our jurisdiction

by prompt notice to the Clerk of the Court, in which event a renewed

appeal will be submitted to this will be submitted to this panel. See

United States v. Jacobson, 

, 21-22 (2d Cir. 1994).




illustrate: United States v. Salameh, 

, 280 (2d Cir. 2001)
(“With regard to the fact-sensitive question of whether a defendant
merits a mitigating role reduction, we review for abuse of discretion
the district court’s application of the Guidelines to the
circumstances of the particular case before it.”); United States v.
Castano, 

, 113 (2d Cir. 2000) (“We review for clear error
a sentencing court’s finding that a defendant did not play a minor
role in the offense.”); United States v. Gaston, 

, 1468
(2d Cir. 1995) (“We review de novo the district court’s legal
conclusion as to whether the circumstances constitute ‘minimal’ or
‘minor’ participation.”).    With respect to Guidelines calculations
generally, we have also said, “We review issues of law de novo, issues
of fact under the clearly erroneous standard, mixed questions of law
and fact either de novo or under the clearly erroneous standard
depending on whether the question is predominantly legal or factual,
and exercises of discretion for abuse of discretion.” United States v.
Selioutsky, 

, 119 (2d Cir. 2005) (internal citations
omitted).

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