ARTHUR J. SCHWAB, District Judge.
When faced with an alleged material breach of a plea agreement (which dismissed felony counts at 11-cr-0302 upon sentencing at 12-cr-0155), and after the sentencing hearing has occurred including the actual dismissal of said counts, (a) must the Government first petition the Court for a ruling that a material breach of the plea agreement has occurred, and that the plea agreement should be set aside, and (b) must the Court grant said requested relief,
In other words, it is an improper use of the Grand Jury process, and a violation of the due process rights of Defendant, for the Government to re-indict a defendant on dismissed felony counts (pursuant to a plea agreement), after the actual dismissal of said counts at the sentencing hearing, without first receiving a ruling from the Court that a material breach of the plea agreement has occurred, and a declaration from the Court setting aside the plea agreement. This is especially true herein where Defendant has already completed his incarceration and supervised release, despite the fact that he allegedly breached an important provision of the plea agreement, after the sentencing hearing but before he began his incarceration, and said breach also was known to the Government shortly after he began his custodial sentence.
This case presents a most unusual situation wherein the Government has re-indicted Defendant on two out of three of the exact same felony charges against Defendant that were previously dismissed, by this Court, pursuant to a plea agreement, several years after sentencing was pronounced, without first seeking a determination by this Court that Defendant in fact breached the plea agreement, and a ruling on the possible remedy for such a breach. The current felony charges at 15-cr-0200 were reinstated (albeit in a new Indictment) almost three (3) years after Defendant was sentenced (on 12-cr-0155), after he served a one (1) year custodial sentence, at least a year after the end of supervised release, and almost two (2) years after the Government became aware of the alleged breach of the plea agreement at 12-cr-0155.
The Government re-indicted Defendant on the previously dismissed charges, because Defendant allegedly failed to comply with a term of the plea agreement, whereby he was required to "immediately notify the Court and the United States Attorney of any improvement in his economic circumstances that might increase his ability to pay restitution and that occurs from the date of this agreement until the completion of his sentence, including any term of supervised release." Doc. No. 20-1. Defendant admits that he received $345,000, after sentencing was pronounced, but prior to serving his incarceration. For the reasons that follow, the Court will dismiss the Indictment at 15-cr-0200 on due process grounds because the plea agreement still stands.
Because the timeline of the procedural history of this situation is critical to the issues before this Court, the Court will briefly recount it. In 2011, an information was filed against Defendant alleging tax evasion. 11-cr-0060. Then, on December 20, 2011, Defendant was indicted at 11-cr-0302, on three counts of tax evasion, bankruptcy fraud, and money laundering, in violation of 26 U.S.C. § 7201, and 18 U.S.C. § 152(1) and 152(a)(1)(B)(i), respectively. On June 5, 2012, working with his trial counsel, and Assistant United States Attorney ("AUSA") Tonya Sulia Goodman (who substituted for the listed AUSA, Mr. Conway, who was on assignment elsewhere), the parties negotiated a plea deal, and Defendant, Louis Lamanna, signed a plea agreement. On June 8, 2012, another information was filed against Defendant alleging willful failure to pay income taxes in violation of 26 U.S.C. § 7203. 12-cr-0155.
On June 25, 2012, Defendant pled guilty before this Court to the three count information at 12-cr-0155, pursuant to the plea agreement executed on June 5, 2012. In addition to what the Court will term as the "notification clause" which is the subject of this case, the parties also agreed "that the government will move to dismiss the indictment at Criminal No. 11-0302 at the end of the sentencing hearing." 15-cr-200 at Doc. No. 20-1.
Also, critically, unlike standard cooperation agreements (which are the subject of the body of case law cited by the Government in support its practice here), and many other plea agreements that this Court has encountered during its time on the bench (which include language regarding actions the Government may take in the event of a breach, including re-instatement of dismissed charges), there was no "relief" clause or any other specialized language stating that the Government maintained a right to re-indict Defendant upon a perceived breach of the agreement.
On November 27, 2012, at 12-cr-0155, Defendant was sentenced to a four (4) month and one (1) day term of imprisonment at Count One (1), a four (4) month and one (1) day term of imprisonment at Count Two (2), and a four (4) month and one (1) day term of imprisonment at Count Three (3), to be served consecutively, followed by a one (1) year term of supervised release at Count One (1), a one (1) year term of supervised release at Count Two (2), and a one (1) year term of supervised release at Count Three (3), to be served consecutively (later amended to be served concurrently at text order of 9/30/2014). Restitution was ordered in the amount of $708,347.01. Defendant was ordered to surrender for service of his imprisonment by January 30, 2013. However, following three (3) motions to delay his report date based upon medical circumstances, two (2) of which were granted by this Court, the Court ultimately ordered Defendant to commence his prison term on August 30, 2013. Doc. No. 39 of 12-cr-155.
After he was sentenced, but prior to being committed to the custody of the Bureau of Prisons, on July 26, 2013, Defendant received approximately $345,000.00, which for the purposes of these proceedings were not contended to be illicit or from an illicit source. He admits that he failed to notify the United States Attorney for the Western District of Pennsylvania of receipt of this money.
In October of 2013, approximately a month after Defendant began his prison sentence, AUSA Conway became aware of the receipt of the money which forms the basis for the alleged "failure to notify" breach. In the nearly two years that followed, the Government never sought a ruling from this Court to nullify or rescind the plea agreement at any time, and still has not done so.
On July 15, 2014, Defendant's term of supervised release commenced, and on July 14, 2015, his term of supervised release expired. Doc. No. 43 at 12-cr-155. Defendant is current on his restitution obligations, having paid $12,730.00 out of $708,347.01.
On September 16, 2015, the current indictment was filed at 15-cr-0200 which is identical to counts one and two of the indictment at 11-cr-0302, which was dismissed pursuant to the plea agreement, at the conclusion of the sentencing hearing on 12-cr-0155. The basis for the Government's re-indictment of previously dismissed charges is founded upon the Government's unilateral belief that Defendant breached the term of the plea agreement requiring him to notify the Court and the United States Attorney of any improvement in his financial condition. Defendant has filed the instant Motion to Dismiss and Motion for Bill of Particulars at doc. nos. 38 and 40. Following extensive briefing, the Court scheduled a hearing/argument thereon.
The following factual stipulations were entered into by the parties prior to the hearing of 2/5/16. Doc. No. 70.
As identified at the outset of this Memorandum Opinion, the issue before this Court is whether the Government followed the proper procedure in this situation where the Government believed Defendant breached the terms of the plea agreement, following sentencing pronouncement, and dismissal of criminal charges. The Government's position is that it may re-indict or re-instate previously dismissed charges (that were previously dismissed by this Court) without first seeking a judicial determination that the plea agreement (the contract) was breached, and may unilaterally determine the remedy for the breach. This is the current procedural posture of this case.
The Court rules that the proper and fair procedural mechanism, under basic tenets of contract law,
A Grand Jury's historical role is to assess whether there is adequate basis to bring a criminal charge, not an adjudicatory body that sits to determine guilt or innocence. United States v. Williams, 504 U.S. 36, 47 (1992). It is well-settled that "[a]n indictment returned by a legally constituted and unbiased [G]rand [J]ury, like an information drawn by the prosecutor, if valid on its face, is enough to call for trial of the charge on the merits. The Fifth Amendment requires nothing more." Costello v. United States, 350 U.S. 359, 363 (1956). It is also well established that the investigative powers of a Grand Jury are very broad, and that a presumption of regularity applies to Grand Jury proceedings. Hawthorne, Inc. v. Director of Internal Revenue, 406 F.Supp. 1098 (E.D. Pa. 1975)(citations omitted).
The Court does not suggest that the Grand Jury acted improperly but rather it is a distortion of the Grand Jury process and the resources of the Grand Jury to employ the Grand Jury on a case such as this, without first receiving a judicial determination from this Court that the plea agreement was breached, and the remedy, if any, for said breach. "The ex parte character of the [G]rand [J]ury proceedings makes it peculiarly important for a federal prosecutor to remember that, in the familiar phrase, the interest of the United States `in a criminal prosecution is not that it shall win a case, but that justice shall be done.'" Williams (dissent) at 64, citing Berger v. United States, 295 U.S. 78, 88 (1935).
This Court's research has revealed no other case within the Third Circuit that is directly on point from a factual and/or procedural perspective, and the cases cited by the Government (not decided by the Court of Appeals for the Third Circuit), all relate to dissimilar situations.
In United States v. Ataya, 864 F.2d 1324, 1329-1330 (7
United States v. Ataya, 864 F.2d 1324, 1329-1330 (7
The Government here argues for a per se rule that anytime it believes a Defendant allegedly violates a plea agreement, no matter what the procedural posture, it may re-indict a Defendant based upon its own belief of a violation, even after charges are dismissed by the Court, the sentence has been pronounced, and a custodial sentence has been served. While the parties appear to agree that it is the Government's burden to prove breach of a plea agreement by a preponderance of the evidence, in its responsive brief, the Government also seems to be attempting to shift the burden to Defendant to raise this issue through a Motion to Dismiss, which arguably requires a shifting of the burden of proof from the Government to a Defendant.
The Government states that "Defendant maintains a `heavy burden,' United States v. Kubini, et al. 2014 WL 1910287, at * 29 (W.D. Pa. 2014)," and further argues that the Judges in the United States District Court for the Western District of Pennsylvania generally lack supervisory authority over the Grand Jury process. Doc. No. 54 at 9.
All of the cases cited by the Government, in support of its belabored position that no pre-indictment judicial determination of breach is required, are factually distinguishable from the present scenario, because the breaches of the plea agreements in those cases were raised pre-sentence, and in some instances pre-plea. Additionally, all of the alleged breaches relate to immunity and cooperation agreements. Those certainly are not the instant circumstances, where the breach was not alleged until after sentence was pronounced, and the felony counts upon which Defendant is now indicted were dismissed, and where Defendant's full custodial sentence had been served. Additionally, several involved cooperation agreements with express breach provisions (United States v. Ramunno, 133 F.3d 476 (7
The Government cites to United States v. Verrusio, 803 F.2d 885 (1986), a case where a Defendant was re-indicted after allegedly breaching a prior plea agreement to testify truthfully before a Grand Jury and at trial against his co-conspirators, and that agreement conditioned his truthful testimony on its promise not to re-indict him on dismissed charges. In that case, the United States Court of Appeals for the Seventh Circuit held that the Government was not required to obtain a judicial determination that Defendant breached a plea agreement before re-indictment, but again, that case involved a pre-sentence re-indictment. Despite its factually and procedural dissimilarity to this case, the following statements of the Court of Appeals in Verrusio are noteworthy:
United States v. Verrusio, 803 F.2d 885, 888 (7th Cir. 1986).
The Court of Appeals in Verrusio went onto conclude that the second indictment did not deprive defendant of his interest in enforcement of the plea agreement, because the second indictment alone did not deny him the benefit of his bargain. The opposite is true herein.
While case law states that "a defendant's failure to fulfill the terms of a pretrial agreement relieves the government of its reciprocal obligations under the agreement, United States v. Simmons, 537 F.2d 1260, 1261 (4th Cir. 1976); United States v. Resnick, 483 F.2d 354, 358 (5th Cir.), cert. denied, 414 U.S. 1008, 94 S.Ct. 370, 38 L.Ed.2d 246 (1973); United States v. Nathan, 476 F.2d 456, 459 (2d Cir.), cert. denied, 414 U.S. 823, 94 S.Ct. 171, 38 L.Ed.2d 56 (1973), the analogy to contract law doctrines is not determinative in the area of plea negotiation, however." United States v. Calabrese, 645 F.2d 1379 (10
"Because important due process rights are involved, plea negotiations must accord a defendant requisite fairness and be attended by adequate `safeguards to insure the defendant what is reasonably due (in) the circumstances.'" Calabrese, quoting Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 498, 30 L.Ed.2d 427 (1971); see Cooper v. United States, 594 F.2d 12, 15-20 (4th Cir. 1979).
Critically, the United States Court of Appeals for the Tenth Circuit in Calabrese, 645 F.2d 1379, 1390, further explained: "We believe that one requisite safeguard of a defendant's rights is a judicial determination, based on adequate evidence, of a defendant's breach of a plea bargaining agreement. The question of a defendant's breach is not an issue to be finally determined unilaterally by the government." Id., citing United States v. Simmons, 537 F.2d 1260, 1261-62 (4th Cir. 1976).
The decision of the United States Court of Appeals for the Third Circuit, in Stolt-Nielsen, S.A. v. United States, 442 F.3d 177 (3d Cir. 2006), which was cited by both parties for different propositions (and is the primary case cited by the Government in support of its position that a pre-indictment judicial determination is not required), is another case which is factually inapposite from this case. The issue therein was whether the Court could enjoin a federal criminal prosecution for violation of immunity agreement (not a re-indictment on previously dismissed charges after sentencing). However, the Court of Appeals for the Third Circuit, in dicta stated (citing dicta from the Court of Appeals from the Seventh Circuit, in the United States v. Meyer case), the following:
Stolt-Nielsen, S.A. v. United States, 442 F.3d 177, 184 (3d Cir. March 23, 2006), as amended (May 16, 2006).
This Court cites the Stolt-Nielsen case, not for its holding because it is factually and procedurally distinguishable, but rather, for the principle that the Court of Appeals for the Third Circuit has recognized that a pre-indictment determination is the most appropriate mechanism generally, and is a de minimis inconvenience for the Government to secure that determination pre-indictment.
The Court thus finds that under the facts and procedural history of this case, and the years of delay in seeking re-indictment (whether due to benign bureaucratic delay or otherwise), a prior judicial determination of breach of the plea agreement is not only most proper, but is a de minimis inconvenience for the Government. After all, the fact that Defendant has been re-indicted is not a trivial matter. Subjecting a person to an indictment, in addition to the substantial legal fees, still constitutes a risk of damage to a person's reputation and standing within his or her community. (United States v. Williams, at 63, "the handing up of an indictment will often have a devastating personal and professional impact that a later dismissal or acquittal can never undo.")
In making this determination, the Court is most mindful of the important public policy considerations at play. If the Court were to countenance the approach taken by the Government in this case, the inevitable result would have a chilling effect on the plea bargaining process, in that Defendants would be left with the real possibility that dismissed charges may be re-instated at any time without any judicial intervention, even absent any relief "in the event of breach" language, or other remedy language in the operative agreement. This result would be unjust and inequitable given the panoply of Constitutional rights that defendants give up in exchange for the plea bargains that are reached. Absent clearly worded language to which a defendant agrees, those bargains should not be undone without a prior judicial determination, and further, the resources of the Grand Jury should not be employed without such a prior judicial determination.
Defendant's Motion to Dismiss the Indictment for lack of due process is GRANTED (doc. no. 38), and all other motions will be denied as moot at this time (doc. nos. 38 and 40).
