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United States v. Anderson

June 15, 2007

UNITED STATES OF AMERICA,
v.
WALTER ANDERSON, DEFENDANT.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

OPINION AND ORDER

This matter is before the Court on the government's motion pursuant to Rule 35(a) of the Federal Rules of Criminal Procedure to "correct clear error" by the Court with respect to the sentence imposed on the defendant. Upon consideration of the motion, the opposition, the reply, the entire record in this case, and the relevant statutes and case law, the Court will deny the motion.*fn1

I. BACKGROUND

On September 8, 2006, defendant Walter Anderson pled guilty to Counts 5, 6, and 11 of the Superseding Indictment under Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure. Counts 5 and 6 alleged, respectively, that Mr. Anderson evaded federal taxes on income earned in 1998 and 1999, in violation of 26 U.S.C. § 7201. See Superseding Indictment ¶¶ 42-45. Count 11 alleged that he defrauded the District of Columbia by failing to report or pay taxes on his 1999 income, in violation of 22 D.C.C. § 3221(a). See id. ¶¶ 54-55. The plea agreement into which Mr. Anderson entered provided, in relevant part, the following:

2. Penalties and assessments: Pursuant to Fed. R. Crim. P. 11(c)(1)(C), the United States and Mr. Anderson agree that the maximum term of imprisonment will be ten years. . . .

4. Restitution: Mr. Anderson agrees that the court may order restitution pursuant to 18 U.S.C. § 3572 and 16 D.C. Code § 711.

Plea Agreement ("Plea") ¶¶ 2, 4. There was no provision for supervised release in the plea agreement.

In the two sentencing memoranda submitted by the government in advance of the sentencing hearing, it argued that the Court should order federal restitution as a condition of supervised release. See Gov't Mem. at 19; Gov't Resp. at 12-16. In the two sentencing memoranda submitted by the defendant in advance of the hearing, he argued that the Mandatory Victim Restitution Act, 18 U.S.C. § 3663A, does not directly apply to his Title 26 offenses in Counts 5 and 6; that the Court need not impose restitution where the IRS's civil collection process would duplicate the Court's restitution determination; that the calculation of the tax loss for purposes of restitution should be limited to the counts of conviction; and that an alternate theory of taxation would result in a significantly lower amount of loss. See Def. Mem. at 56-58; Def. Reply at 13-15.

The Court held a sentencing hearing on March 19, 20, 23, and 27, 2007. The government presented evidence by three expert witnesses concerning the amount of income received by Mr. Anderson during 1998 (Count 5) and 1999 (Count 6), and the calculation of taxes not paid to the United States and the District of Columbia governments. The government's experts testified that in 1998 and 1999 Mr. Anderson failed to report $365,484,654 in income on his federal and D.C. tax returns. According to those experts, the total amount of unpaid federal taxes for 1998 and 1999 was $140,587,613. The government's experts further testified that Mr. Anderson defrauded the D.C. government of taxes during 1999 (Count 11) in the amount of $22,809,032. The defendant presented evidence through his own expert witness as to the amount of tax loss under a different theory of tax assessment that led to a significantly lower tax liability, calculating his unpaid federal tax liability for 1998 and 1999 at a total of $73,407,227. The focus of the testimony throughout the hearing, by both the government and defense experts, was on the amount of loss suffered by the United States and by the District of Columbia.

On the third day of the sentencing hearing -- March 23, 2007 -- and after all the expert testimony had concluded, counsel for the defendant argued orally to the Court that because the binding Rule 11(c)(1)(C) plea agreement did not expressly provide for supervised release, supervised release could not be imposed; it followed that restitution on the federal counts therefore was not available as a condition of supervised release. The Court adjourned the hearing, permitting the parties to submit additional briefs on the new issue raised by the defendant concerning the Court's authority to order supervised release and restitution as a condition of that supervised release. The government submitted a brief on March 26, 2007 in response to the defendant's argument, no longer seeking restitution as a condition of supervised release. Gov't Mem. Rest. at 2. In that brief, the government argued that the Court nevertheless could order restitution based on a provision of the Victim and Witness Protection Act, 18 U.S.C. § 3663(a)(3), that provides that a court may order restitution "in any criminal case to the extent agreed to by the parties in a plea agreement," and the terms of paragraph 4 of the defendant's plea agreement, independent of any provision in the plea agreement for supervised release (or lack thereof). Id. The defendant submitted a brief in opposition to the government's new theory of federal restitution on the morning of March 27, 2007. The Court heard oral argument on the restitution issue that same day.

After considering the parties' arguments, the record in the case, and the relevant statutes and case law, the Court imposed sentence on the afternoon of March 27, 2007. It ordered restitution under 22 D.C. Code § 611 in the amount of $22,809,032 for the fraud against the District of Columbia government to which Mr. Anderson pled guilty in Count 11 of the Superseding Indictment. The Court concluded, however, that it had no authority to order restitution for the federal tax evasion counts to which the defendant pled in Counts 5 and 6.*fn2

II. DISCUSSION

Rule 35(a) of the Federal Rules of Criminal Procedure states that "[w]ithin 7 days after sentencing, the court may correct a sentence that resulted from arithmetical, technical, or other clear error." FED. R. CRIM. P. 35(a).*fn3 The government argues that the Court committed clear error during sentencing when it did not impose restitution for the two federal tax evasion counts to which the defendant pled guilty, Counts 5 and 6 of the Superseding Indictment. Gov't Mot. to Correct at 2-3. The defendant responds that (1) Rule 35(a) does not give the Court the authority to amend its sentence except under very limited circumstances, circumstances that do not apply to this case, and (2) the Court has no authority to impose restitution in this case under 18 U.S.C. § 3663(a)(3) or any other arguably relevant statute or under the terms of the Rule 11(c)(1)(C) plea agreement. Def. Opp. to Mot. to Correct at 1-3.

The Court agrees with the defendant that the Court's authority to "correct a sentence" pursuant to Rule 35(a) is restricted to ...


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