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Second Circuit Demonstrates the Difficulties in Withdrawing a Guilty Plea and Challenging a Below-Guidelines Sentence

In United States v. Rivernider, 13-4865, the Court (Livingston, J., Lynch, J. and Rakoff, D.J., sitting by designation) affirmed the judgment entered by the United States District Court for the District of Connecticut (Chatigny, J.) against two defendants, Robert Rivernider and Robert Ponte.  The defendants pled guilty and were sentenced for multiple counts of wire fraud, conspiracy to commit wire fraud, and tax evasion stemming from a Ponzi scheme and real estate scheme the two ran together.  Rivernider is a reminder of the limits on a criminal defendant’s decision-making authority, whether it be withdrawing his guilty plea or filing a pro se motion on a strategic decision he and his counsel disagree on.  The decision also underscores the preference for finality once a defendant decides to plead guilty, and the uphill battle a defendant faces in challenging his below-Guidelines sentence.  Finally, Rivernider is noteworthy for its reference to the American Bar Association’s (“ABA”) report on reform of federal sentencing for economic crimes: the Court emphasizes that the report is a discretionary—not binding—reference for trial courts during sentencing, but says nothing to discourage defense lawyers from citing to this authority.

Rivernider’s Motion to Withdraw his Guilty Plea

The District Court had denied Rivernider’s pro se motion to withdraw his guilty plea.  On appeal, Rivernider argued that his guilty plea was not supported by an adequate factual basis because his statements at the plea colloquy failed to establish that he had the requisite mens rea for wire fraud.  The Court rejected this argument, pointing to evidence in the record—particularly the detailed statement of offense conduct Rivernider had signed—which demonstrated he had the requisite level of fraudulent intent.  Although Rivernider may not have had subjective intent to harm his victims, the Court continued, wire fraud only requires that Rivernider intentionally withheld material information from investors, and the record undisputedly supported such a finding.

The Court also denied Rivernider’s argument that his plea was not knowing and voluntary.  Pointing to the District Court’s “extensive plea colloquy,” the Court found no evidence that Rivernider misunderstood the proceedings or was under pressure to plead guilty.

Finally, the court denied Rivernider’s argument that his counsel coerced his guilty plea, emphasizing that Rivernider’s fifty-three page motion to withdraw his plea contained only two brief and conclusory references to this issue. 

Rivernider’s Motion for Appointment of New Counsel

The Court dismissed Rivernider’s argument that the District Court had erred in failing to appoint new counsel who would make Rivernider’s motion to withdraw his guilty plea.  The Court explained that Rivernider did have counsel below, who had decided he could not make Rivernider’s motion after concluding that there were no valid grounds for it.  Just because Rivernider disagreed with his counsel’s decision did not automatically entitle him to new counsel to make this motion. 

First, the Court noted, a defendant has an absolute right to make strategic decisions only in limited situations, such as when deciding to plead guilty or go to trial; “for the rest, strategic decisions are confided to counsel”—including whether to withdraw a guilty plea.  If counsel refuses to make the motion, the defendant does not automatically receive a right to “hybrid” representation, in which he is represented by counsel at times and pro se for others.  Second, Rivernider had not been entitled to new counsel because there was no evidence that his counsel had been ineffective in refusing to file the motion:  the motion was frivolous.  And, the District Court had adequately evaluated and rejected Rivernider’s allegations that his counsel had a conflict of interest, such that he had coerced Rivernider’s guilty plea; these allegations consisted only of conclusory references “buried within a lengthy and otherwise irrelevant submission” without any “specific factual allegations.”  The District Court had therefore not erred in refusing to appoint Rivernider new counsel for his motion.

The Court Rejected Both Defendants’ Sentencing Challenges

The defendants argued that their sentences were substantively unreasonable, laying out a litany of factors that they contended should have reduced their respective sentences.  The Court disagreed, noting that the District Court had already considered these mitigating factors during sentencing.  In any event, the Court continued, the District Court had issued sentences well below the Guidelines range, and it is “difficult to find that a below-Guidelines sentence is substantively unreasonable.”

Ponte also relied on the ABA’s 2014 report, titled “A Report on Behalf of the American Bar Association Criminal Justice Section Task Force on The Reform of Federal Sentencing for Economic Crimes,” as evidence that his sentence was greater than necessary and therefore substantively unreasonable.  In rejecting this argument, the Court noted that the District Court had considered the ABA’s report and its rationale for reducing sentences for certain economic crimes, yet, “to understate the case,” the District Court was “no more bound by a hypothetical set of guidelines issued by proponents of changes in the law than it was by the actual Guidelines promulgated by the Sentencing Commission.” 

The Court also rejected Ponte’s arguments that his sentence was procedurally unreasonable.  It found that the District Court had correctly determined the amount of loss, because even though the Government had not identified the misrepresentations found in each individual loan involved in the real estate scheme, the District Court had found other evidence to be credible and sufficient to establish that it was more likely than not that all of the loans contained material misrepresentations.  In addition, the Court disagreed with Ponte’s argument that the District Court had improperly applied enhancements to his sentence.  First, the District Court had properly found that Ponte had discretionary authority in the fraudulent schemes, as the evidence showed he occupied a position of trust over his victims, particularly in his role recruiting them and serving as their investment advisor.  And second, the District Court had not erred in refusing to grant an acceptance-of-responsibility reduction because Ponte did not plead guilty until several weeks into trial and contradicted his statement of offense conduct at sentencing.

The Court Upholds the Restitution Order

The District Court had ordered restitution of $22,140,765.99, which the defendants challenged.  First, they argued that the restitution order impermissibly charged interest.  The Court rejected this argument, noting that although loss is limited to unpaid principal, minus the value of collateral and may not include interest, the restitution order did not require defendants to pay any interest; instead, any interest the defendants previously paid was charged by the victim-lenders while the scheme was ongoing.

Second, Ponte argued that the restitution calculation for the second scheme, which related to fraudulent real estate loans, did not reflect actual losses as some of the mortgage loans involved were sold prior to foreclosure at an unknown price.  In other words, downstream lenders who purchased mortgage loans for less than the value of the unpaid principal would receive more money than was actually lost under the restitution order.  As Ponte had failed to raise this argument below, the Court reviewed it for plain error and affirmed the District Court’s order.  The Court concluded that any error on this point was not “clear or obvious,” but rather, “requires a complex understanding of the mortgage sales market,” which the District Court could not be faulted for failing to consider sua sponte.

The Impact of Rivernider

Rivernider affirms long-standing principles in what Judge Lynch once described as “our administrative system of criminal justice”:  that while a defendant has an absolute right to determine whether to plead guilty or proceed to trial, he has no similar authority to decide other litigation strategies and if he and his counsel disagree on such strategies, he has no automatic entitlement to proceed pro seSee Gerard E. Lynch, Our Administrative System of Criminal Justice, 66 Fordham L. Rev. 2117 (1998).  Nor does he have the right to demand new counsel where retained or appointed counsel are unwilling to file the motion.  Defense attorneys should therefore ensure their clients understand the typical binding nature of a guilty plea; once a guilty plea is given, it is not easy to get it back.  Because the plea waives all nonjurisdictional defenses, the client must plead guilty not out of panic or momentary strategic advantage, but because they are prepared to live with the consequences.   

Further, although Rivernider does not hold that the ABA report on reform of federal sentencing for economic crimes is binding on a trial court, it does not foreclose parties from relying on the report at sentencing.  At least one court has recently referred to the report when calculating a defendant’s sentence, and it remains to be seen if more courts continue to do so following RiverniderSee United States v. Faibish, 2015 U.S. Dist. LEXIS 101200, at *5 (E.D.N.Y. July 16, 2015) (discussing the report after noting that the loss table in the Guidelines “is but one example of the seemingly mindless acceleration of penalties for economic crimes incorporated in the current Sentencing Guidelines regime.”).  The ABA report is worth a read:  it is an effort not to trim back the Guidelines for economic crimes but to develop an entirely new Guideline for economic crimes.  Such a project is necessary given the general consensus that the current regime is not useful to courts or to litigants because it proposes sentences that judges are increasingly unwilling to impose because they are disproportionate for all but the most serious white-collar offenses (e.g., Madoff).

-By Juvaria Khan and Harry Sandick