In the aftermath of a $70 million collapse of a credit union near Cleveland, Ohio, I appealed the sentence of a man who had entered a guilty plea regarding the receipt of fraudulent loans. At issue was whether the judge's imposition of "consecutive" sentences (i.e., sentences stacked on top of each other, as opposed to running "concurrently") was proper--or even intended in the first place. This turned a 10-year sentence into an 18-year sentence. The appeal took place in 2013. I filed this opening brief, the government filed this opposition, and I filed this reply. This is the audio of the oral argument in the Sixth Circuit. The Sixth Circuit agreed that the sentence was procedurally unreasonable, and it remanded back to the district judge for a new sentencing proceeding. United States v. Nikolovski, No. 12-3679. I then filed this sentencing memorandum, and my client's sentence was then reduced from 18 years to 10 years.
What follows are excerpts of my opening brief to the Sixth Circuit regarding principles of concurrent versus consecutive sentencing in federal court.
Anthony Raguz was Chief Operating Officer of a credit union and ran a scheme to defraud it by taking bribes for issuing loans he knew would not be repaid. Raguz was ultimately responsible for $70 million in unpaid loans. Koljo Nikolovski later learned of the scheme and obtained $5.88 million in such loans. Both were convicted of various counts, including bank fraud and money laundering.
Nikolovski’s Guideline range was calculated as 87 to 108 months in prison, and the Government agreed not to seek a sentence greater than 108 months. At sentencing, the district court varied upward, indicating that a 120-month sentence would be appropriate. Yet the transcript shows that when the district court imposed a 120-month sentence for bank fraud, the court also stated that a sentence of 96 months for money laundering would run consecutively (not concurrently).
There was no other mention of consecutive sentences, and there was no mention of the actual total punishment (216 months) that was ultimately imposed on Nikolovski. This 216-month sentence should be overturned for three reasons: (1) the Guideline range was too high because it is based on the wrong offense; (2) the sentence is procedurally unreasonable because it is not clear that the court intended to impose consecutive sentences leading to this extreme increase (200% of the top of the range); and (3) that extreme increase is substantively unreasonable.
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II. Nikolovski’s 18-year sentence—200% of the top end of the Guideline range—is procedurally unreasonable as it is built on consecutive sentences and it is not even clear that the district court intended a sentence of greater than 10 years.
Consecutive sentences are permissible when necessary for a district court to reach a sentence within the range; otherwise the sentences are to run concurrent.
As noted, when a defendant is sentenced on multiple counts, the Guidelines range is based on the count involving the highest offense level. Sometimes, however, that Guidelines range (which embodies what the Guidelines refer to as the “total punishment”) is greater than the statutory maximum of the count driving the range. If that occurs, the Guidelines provide that the district court shall impose consecutive sentences for various counts “but only to the extent necessary” to reach the “total punishment” within that range. U.S.S.G. § 5G1.2(d). In the more-common scenario where the Guidelines range falls within the statutory maximum, the “sentences on all counts shall run concurrently” (except for situations not applicable here where a statute specifically requires consecutive sentences). Id.; see, e.g., United States v. Alcorn, 27 F. App’x 317, 321 (6th Cir. 2001) (“The district court then has discretion to sentence consecutively up to the upper limit of the range but cannot sentence consecutively beyond the upper limit.”). Moreover, a district court abuses its discretion when it “fails to ‘make generally clear the rationale under which it has imposed the consecutive sentence.’” United States v. Wolcott, 483 F. App’x 980, 989 (6th Cir. 2012) (quoting United States v. Johnson, 553 F.3d 990, 998 (6th Cir. 2009)). If the district court then wishes to imposes a sentence above the range, it can impose an upward variance from the top of the range based on the standard post-Booker principles governing such variances (e.g., no presumption of reasonableness applies to sentences outside the range, greater explanation is needed for such sentences, etc.). See United States v. Erpenbeck, 532 F.3d 423, 437–38 (6th Cir. 2008).
This Court’s Erpenbeck decision is a useful guide here because it involves a district court that corrected its misuse of consecutive sentences and made clear that it intended the sentence actually imposed above the Guideline range. There, the sentencing range was 188 to 235 months, based on multiple counts of bank fraud and obstruction of justice. The district court first stated that it was imposing a sentence 5 months over the top end of the range for the bank fraud (for a total of 240 months) and that it was imposing an additional 60 months consecutively for the obstruction count (for a grand total of 300 months). Id. at 429. Yet, later recognizing that such a consecutive sentence over the range would be improper, the district court stated that it still believed that a “sentence at the 300-month point is the appropriate one” and amended the sentence as follows: It imposed 300 months for the bank-fraud count (an upward variance of 65 months from the top of the range), with a concurrent sentence of 60 months on the obstruction count. Id. at 430. On appeal, this Court affirmed the sentence as reasonable, emphasizing that the sentencing-hearing transcript showed that the district court “believed from the beginning that a 300-month sentence was appropriate,” repeatedly stated that it intended to impose 300 months, and adequately explained the upward variance (27%) over the top end of the range. Id. at 438. In sum, the district court had corrected its initially mistaken consecutive sentences and it had adequately shown that the full length of that sentence was nonetheless intended and justified.
Nikolovski’s case is essentially the opposite of Erpenbeck. Here, the top of the Guideline range was 108 months (9 years), and it appeared that the district court intended to vary up an additional year to 120 months (for an 11% increase), resulting in a 10-year sentence. This is exactly the same 11% variance over the top of the range that the district court imposed when sentencing Raguz. (R. 178 at 31; PageID #1049 (168-month sentence with top of range at 151 months).) Indeed, the district court had remarked that the Government’s recommendation of a Guideline sentence (at or near 108 months) for Nikolovski was a “[b]ig hit.” (R. 157 at 43; PageID #859.) Then, just before imposing the sentence, the district court confirmed with the probation officer that the range was 87 to 108 months. (Id. at 48; PageID #864.) Again, the Court then pronounced the sentence as follows:
THE COURT: Okay. Mr. Nikolovski, it’s the judgment of this Court that you are committed to the custody of the Bureau of Prisons for a term of 120 months on each of Counts 7 through 14, 16 through 20, and 96 months on each of Counts 21 through 25 to be served consecutively.
The Court has decided to upward vary in this case based upon all the aggravated factors that I have gone over and rejecting the proposed range in the plea agreement.
(Id. at 48–49; PageID #864–65.)
The mention of “consecutively” here is the only mention of that concept in the entire proceeding. And there is no mention of the total sentence of 216 months (18 years) at any point. Instead, the transcript reads as if “consecutively” were a typo for “concurrently,” and as if the court intended to upward vary to 120 months, for the same 11% increase as Raguz received. Instead, the full 216 months was entered in the judgment and has become Nikolovski’s sentence—a full 200% of the top end of the range.
This sentence is procedurally unreasonable because there is no way to determine if it is even the intended sentence. Consecutive sentences were likely not intended because they are not even permissible, as they led to a sentence over the range—exactly the mistake corrected in Erpenbeck. Moreover, unlike Erpenbeck, there is no basis to conclude that the district court intended such a drastic variance over the top of the range, as there was no mention of that total sentence (216 months) at any point. And, finally, even if the district court had made clear that it really intended such a long sentence (such as the 27% increase in Erpenbeck), there would have to be extensive explanation for such a massive 100% increase here, especially for a defendant who is a Category I offender with zero criminal-history points. Imagine, for example, if Nikolovski had the highest criminal history possible—Category VI with more than 13 criminal-history points. Even in that extreme scenario, and even assuming the same offense level used by the district court (level 29), his Guideline range would have been only 151–188 months (a top end of 15.6 years). For all of these reasons, the sentence is procedurally unreasonable and calls for a remand.
III. Nikolovski’s 18-year sentence is also substantively unreasonable.
When a district court decides that an outside-Guidelines sentence is warranted, the court “must consider the extent of the deviation and ensure that the justification is sufficiently compelling to support the degree of the variance.” United States v. Aleo, 681 F.3d 290, 299 (6th Cir. 2012) (quoting Gall v. United States, 552 U.S. 38, 50 (2007)). The “farther the judge’s sentence departs from the Guidelines sentence . . . the more compelling the justification based on factors in section 3553(a) must be.” Id. Moreover, when a sentence is outside of the Guidelines range, the appellate court may not apply a presumption of reasonableness to the sentence. Gall, 552 U.S. at 50. When deciding on the sentence, the district court must impose “a sentence sufficient, but not greater than necessary, to comply with” the basic aims of sentencing as set forth in § 3553(a). Aleo, 681 F.3d at 299 (emphasis added).
Here, as noted above, the district court’s entire analysis appeared to set up a variance up to 120 months (one year over the top end of the range of 108 months), not a variance to 216 months (9 years over the top end). Even the Government requested a sentence of no more than 108 months. And the district court remarked that the Guidelines range alone involved a “[b]ig hit” for Nikolovksi. In its sentencing discussion, the district court noted that there were “some positive factors here” such as Nikolovski’s good relationship with his wife and son, and his lack of criminal history. (R. 157 at 43–44; PageID #859–60.) And the court also believed that there were “many negative” factors, such as the loss amounts, the harm to a financial institution, his deception, his lack of work history, and threats of intimidation. (Id. at 44–49; PageID #860–65.) Many of these negative factors are captured by the Guidelines range itself (e.g., the base offense level incorporates the deceptive nature of the crime itself, the offense level is increased 16 points for the amount of the loss, the offense level is increased for losses to a financial institution, etc.). This explains why, for all of the fraud cases across the country in the last few years, the defendants have been sentenced within or below the range approximately 97% of the time. See United States Sentencing Commission Analysis of Fraud Offenses from 1996 to 2011 at 10 (chart). Moreover, while Raguz started the scheme and was responsible for $70 million in losses, Nikolovski became involved years later was responsible for 7% of that amount.
Is there room for a district court to conclude in its discretion that Nikolovski’s negative factors nonetheless justify a variance above even the top end of the range (108 months) requested by the Government? Perhaps. Perhaps a 120- month sentence could fall within that discretion. Perhaps a district court could conclude that such a sentence—though higher than the Government’s request and falling into the 3% of fraud cases in the country involving an upward variance—is “not greater than necessary” to comply with the purposes of sentencing. But a 216-month sentence (18 years) cannot stand, as it doubles the top end of the range (a 100% increase) and adds to national disparity in fraud sentences without adequate justification. Cf. Aleo, 681 F.3d at 300 (holding that sentence for child pornography at 145% over the top end of range was substantively unreasonable, noting that Guidelines took into account much of the conduct). Recall that even if Nikolovksi had the highest criminal history possible (instead of the zero points he actually has), his range would still be 151–188 months—still lower than the 216 months he now serves. That sentence is greater than necessary to achieve the purposes of sentencing. It is therefore substantively unreasonable and warrants remand on this basis as well.
Nikolovski’s sentence is based on the wrong Guidelines range, and is both procedurally and substantively unreasonable. This Court should remand for a proper sentencing.