Rehearing and Suggestion for Rehearing En Banc Denied May 18, 1994.
McDADE, District Judge.
Appellant, the United States of America ("the government"), appeals from the sentence imposed upon Appellee, Leon Hendrickson ("Hendrickson"), by the district
Hendrickson owns and operates Silver Towne, a precious metals and coin dealership, in Winchester, Indiana. Silver Towne is one of the largest coin dealerships in the nation and a leader in gold bullion sales. Hendrickson often attended trade shows as part of his business. At one such trade show, Hendrickson met a man named Robert McGuinn who purported to be a coin dealer. McGuinn purchased from Hendrickson approximately $50,000 worth of gold for which McGuinn tendered cash. The cash was delivered to Hendrickson in a brown paper bag. This sale was the first of approximately eleven transactions which would occur between Silver Towne and McGuinn over the course of three months in early 1990. The transactions totaled approximately $1,094,745 consisting of eleven cash payments varying in size between $28,000 and $140,000. Often times, the cash shipments from McGuinn would arrive at Silver Towne in pails lined with garbage bags and would consist of currency of small denominations. Neither Hendrickson nor any Silver Towne employee filed the Internal Revenue Service ("IRS") Form 8300 as required by I.R.C. § 6050I (1986) for these cash transactions.
An IRS audit and investigation of Silver Towne in November 1990 revealed Silver Towne's failure to file the required Forms 8300 for the cash transactions involving McGuinn. In addition, as one might have suspected, it was later discovered that McGuinn was actually an agent for an international money laundering operation linked to a Colombian cocaine cartel.
For the above reasons, the district court decided that the forfeiture was "extremely punitive and burdensome," and was "a matter that has not been adequately taken into account and could not have been adequately considered by the sentencing commission in formulating the guidelines." The district court reasoned that constructing the guideline ranges on the basis of the amount of money laundered without regard to the actual profit for the criminal exaggerates the harm. The district court found the Hendrickson's payment of the forfeiture in light of this exaggeration "truly extraordinary" particularly since Hendrickson "voluntarily" made immediate payment of the entire $742,555 which required him to liquidate some of his assets. In addition, the district court noted the impact of such a large forfeiture upon both Hendrickson and Silver Towne, a business Hendrickson had spent a "lifetime" building. In the district court's view, extraordinary acceptance of responsibility was also implicated by the fact that Hendrickson had not challenged or otherwise contested the indictment which involved a relatively new offense with limited public awareness and compliance. Accordingly, the district court made a downward departure of six levels from the applicable guideline range and sentenced Hendrickson to five months' incarceration, five months' home detention, and two years' supervised release.
Initially, Hendrickson argues that the government's appeal should be dismissed and this case remanded to the district court for a determination of whether the government's appeal constitutes a breach of the terms of the plea agreement entered into between Hendrickson and the government.
Hendrickson maintains that paragraphs five and seven of the plea agreement demonstrate that the government and Hendrickson intended to waive their respective rights to appeal the sentence imposed by the district court. Paragraphs five and seven state, in pertinent part:
The language contained in these paragraphs cannot properly be construed as a waiver of the right to appeal the sentence imposed by the district court. The waiver of the right to appeal must be express and unambiguous. See United States v. Wiggins, 905 F.2d 51 (4th Cir.1990). No clearly expressed intent to waive the right to appeal can be found in any provision of the plea agreement. The language cited by Hendrickson in paragraphs five and seven simply stands for the proposition that Hendrickson was free to seek a departure from the guideline range and neither party could withdraw from the plea agreement on the basis of the sentence imposed. As such, the express language of the plea agreement does not demonstrate an intent by either Hendrickson or the government to waive their right to appeal the sentence imposed by the district court.
Hendrickson also argues that it was his understanding, given the circumstances surrounding the negotiation of the plea agreement, that both he and the government waived their rights to appeal the sentence imposed by the district court. This contention is directly contradicted by Hendrickson's own statements made at his change of plea hearing. First, on two occasions during the hearing, Hendrickson answered in the affirmative when asked by the district court if the plea agreement embodied the entire agreement between the government and himself. As we have already stated, nothing in the plea agreement could properly be construed as a waiver of the right to appeal by either the government or Hendrickson. Second, and most damning to Hendrickson's argument, the following discussion took place at the hearing:
It is clear from this discussion that Hendrickson fully understood that he retained the right to appeal the sentence imposed. By Hendrickson's own reasoning, it would be "patently unfair" to interpret the plea agreement as allowing Hendrickson to retain the right to appeal the sentence imposed by the district court while finding that the government had waived its right to appeal.
In its appeal, the government argues that the district court erred when it found that the payment of a statutory forfeiture could be the basis for finding "extraordinary acceptance of responsibility" which would, in turn, justify a departure from the Guidelines. A district court is constrained to impose a sentence within the applicable guideline range unless the court "finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree not adequately taken into consideration by the Sentencing Commission in formulating the Guidelines that should result in a sentence different from that described." 18 U.S.C. § 3553(b); See also U.S.S.G. § 5K2.0; United States v. Frazier, 979 F.2d 1227, 1229 (7th Cir.1992). In reviewing a district court's departure
Initially, we find that the Sentencing Commission adequately considered both the possibility of statutory forfeiture and degree of hardship a forfeiture could work when constructing the Guidelines. Section 5E1.4 explicitly states that "[f]orfeiture is to be imposed upon a convicted defendant as provided by statute." As such, it is readily apparent that forfeiture was considered by the Sentencing Commission and was intended to be imposed in addition to, not in lieu of, incarceration. See United States v. Crook, 9 F.3d 1422, 1426 (9th Cir.1993); United States v. Shirk, 981 F.2d 1382, 1397 (3rd Cir.1992), vacated and remanded on other grounds, ___ U.S. ___, 114 S.Ct. 873, 127 L.Ed.2d 70 (1994). The statute applicable in this case, 18 U.S.C. § 982(a)(1), provides for mandatory forfeiture of property in cases involving a conviction for money laundering. In addition, the "extremely punitive and burdensome" nature of forfeitures of the type imposed in this case was also considered by the Sentencing Commission. The assets to be forfeited by Hendrickson were identified pursuant to 18 U.S.C. § 982(b)(2). This subsection requires the forfeiture of substitute assets when a defendant's money laundering activities exceed a specified dollar volume. Specifically, § 982(b)(2) states:
It is plain from the language of section 982(b)(2) that the onerous nature of forfeiture of substitute assets was considered by both Congress and the Sentencing Commission. Intermediaries, who do not retain the property laundered, but instead only reap a profit from their illicit transactions, are not subject to the substitute assets provision of § 982(b)(2) unless they exceed the $100,000 threshold established by the subsection. Thus, only intermediaries, such as Hendrickson, who are financially capable of laundering large amounts of property are required to forfeit substitute assets, and the possibility of an oppressively high forfeiture to profit ratio for such intermediaries plainly was contemplated. As such, an "extremely punitive and burdensome" forfeiture for certain intermediaries was explicitly contemplated by 18
Voluntary payment of restitution prior to adjudication of guilt can be a basis for finding acceptance of responsibility which would warrant a two level reduction in a defendant's offense level. U.S.S.G. § 3E1.1 Application Note 1(c). Neither the payment of restitution nor the payment of a statutorily mandated forfeiture can, in and of itself, be a ground for departing from the Guidelines.
It is the quality of voluntariness that forfeiture lacks which makes it unsuitable as a ground for finding extraordinary acceptance of responsibility. The very cornerstone for a finding of acceptance of responsibility and, therefore, a finding of extraordinary acceptance of responsibility must be the voluntary nature of the act or acts performed which underlie such a finding. Indeed, the nonexclusive considerations listed in U.S.S.G. § 3E1.1 Application Notes 1(a)-(g) either explicitly state or logically infer that the acts enumerated be of a voluntary nature. Interestingly, although "voluntary payment of restitution prior to the adjudication of guilt" is one consideration listed, payment of an amount subject to forfeiture is not listed. U.S.S.G. § 3E1.1 Application Note 1(c). The Ninth Circuit in United States v. Crook considered whether an extraordinary forfeiture could be the basis for finding extraordinary acceptance of responsibility. 9 F.3d 1422 (9th Cir.1993). In holding that it could not, the Ninth Circuit stated:
Id. at 1426. We are in agreement with the Ninth Circuit. Forfeiture is not a voluntary act and cannot be a ground for finding extraordinary acceptance of responsibility. Thus, the district court erred as a matter of law when it departed from the Guidelines based upon extraordinary acceptance of responsibility as shown by payment of the forfeiture by Hendrickson.
We conclude that the district court erred as a matter of law when it departed from the guideline range for incarceration grounded upon its finding of extraordinary acceptance of responsibility which was, in turn, based upon Hendrickson's payment of a mandatory forfeiture. Payment of a forfeiture mandated by statute is not voluntary and cannot be a ground for a finding of extraordinary acceptance of responsibility. As such, a departure from the guideline range for the reasons stated by the district court was not reasonable. Therefore, we VACATE Hendrickson's sentence and REMAND to the district court for resentencing consistent with this opinion.