13‐4060‐cr United States v. Desnoyers

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 12th day of November, two thousand fourteen.

PRESENT: PIERRE N. LEVAL, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges. ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ x

UNITED STATES OF AMERICA, Appellant,

v. 13‐4060‐cr

MARK DESNOYERS, Defendant‐Appellee.

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FOR APPELLANT: RAJIT S. DOSANJH, Assistant United States Attorney (Craig A. Benedict, Assistant United States Attorney, on the brief), for Richard S. Hartunian, United States Attorney for the Northern District of New York, Syracuse, New York.

FOR DEFENDANT‐APPELLEE: JOHN B. CASEY, Dreyer Boyajian LLP, Albany, New York.

Appeal from the United States District Court for the Northern District of

New York (Hurd, J.).

UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND

DECREED that the case is REMANDED for resentencing.

The government appeals a September 9, 2013 amended judgment of the

United States District Court for the Northern District of New York sentencing

defendant‐appellee Mark Desnoyers to five yearsʹ probation, with six monthsʹ home

confinement and twenty‐six consecutive weekends of intermittent confinement.

Desnoyers was convicted by a jury of five counts arising from his malfeasance as an air

monitor for asbestos abatement projects. This is the governmentʹs third appeal in this

case. We assume the partiesʹ familiarity with the underlying facts, the procedural

history, and the issues on appeal, which we briefly summarize before addressing the

merits.

Desnoyers was convicted of (1) conspiracy to violate the Clean Air Act

and to commit mail fraud by engaging in certain ʺrip and runʺ asbestos abatement

projects, (2) aiding and abetting a violation of the Clean Air Act in another, separate

abatement project, (3) a substantive mail fraud offense arising from yet another

abatement project, and (4) two counts of making false statements to agents of the

Environmental Protection Agency (the ʺEPAʺ). After trial, the district court vacated the

‐2‐ conspiracy conviction and sentenced Desnoyers to five yearsʹ probation and restitution

of $34,960, on a joint and several basis ʺwith related case Curt Collins.ʺ App. at 566‐67.

The government appealed, and we reinstated the conspiracy conviction and remanded

for resentencing. See United States v. Desnoyers,

(2d Cir. 2011).

On remand, the district court imposed the same probationary sentence,

declining to apply the so‐called ʺorganizer enhancementʺ under United States

Sentencing Guidelines (ʺU.S.S.G.ʺ) § 3B1.1. Although the district court had concluded

in sentencing a co‐defendant that Desnoyers would be jointly and severally liable for

$250,302.22 in connection with the conspiracy projects, Sp. App. at 34, at Desnoyersʹs

resentencing the district court held that Desnoyers should be liable only for his

ʺproportionate liabilityʺ with respect to the conspiracy count, App. at 585‐86. The

district court imposed restitution in the total amount of $45,398, which included

Desnoyersʹs liability for nine percent of the cleanup costs relating to the conspiracy

count; the court did not explain, however, how it arrived at the nine percent figure. The

government again appealed. We vacated the sentence, with instructions for the district

court to reconsider the organizer enhancement in light of the reinstatement of the

conspiracy count, and to calculate restitution with a full explanation of its reasoning.

See United States v. Desnoyers,

, 390‐91 (2d Cir. 2013).

On the second remand, the district court again declined to apply the

organizer enhancement and declined to hold Desnoyers jointly and severally liable for

‐3‐ restitution based in part on the fact that he earned less money from the scheme than his

co‐conspirators and that apportionment was ʺfar more equitable.ʺ Sp. App. at 34. The

court apportioned to Desnoyers liability for fourteen percent of the cleanup costs

relating to the conspiracy count: the court explained that the fourteen percent figure

represented ʺan approximation of [Desnoyersʹs] share of the proceeds from the

abatement/air monitoring contracts for the projects outlined in [the conspiracy count].ʺ

Sp. App. at 33‐34. It imposed the same five‐year probationary term, but also imposed

six monthsʹ home confinement and twenty‐six weekends of intermittent confinement.

This appeal by the government followed.

On appeal, the government argues that (1) the district court erred in not

applying the organizer enhancement, (2) Desnoyersʹs sentence is substantively

unreasonable, (3) the district courtʹs restitution order constituted an abuse of discretion,

and (4) the district judge should be removed from the case on remand. We address

each argument in turn.

1. Organizer Enhancement

We review a district courtʹs interpretation of the Guidelines de novo and its

findings of fact for clear error. United States v. Mejia,

(2d Cir. 2006).

Section 3B1.1(a) of the U.S.S.G. provides for a four‐level increase if the criminal activity

involved five or more participants and the defendant was an ʺorganizer or leader.ʺ See

also United States v. Beaulieau,

, 379‐80 (2d Cir. 1992) (ʺWhether a defendant

‐4‐ is considered a leader depends upon the degree of discretion exercised by him, the

nature and degree of his participation in planning or organizing the offense, and the

degree of control and authority exercised over the other members of the conspiracy.ʺ).

The government argues that the district courtʹs stated reasons for

declining to apply the organizer enhancement are at odds with findings in the

presentence report (ʺPSRʺ), which the district court explicitly adopted on a wholesale

basis. We agree. First, the district court found that Desnoyers was ʺless culpableʺ than

his co‐defendants, Sp. App. at 6, and yet the PSR noted that Desnoyers ʺdevised and

directedʺ the criminal scheme with two co‐conspirators, offering no indication that

Desnoyers was not at least an equal participant, PSR ¶ 15. Next, the district court found

that Desnoyers was ʺsomewhat duped and misledʺ by his co‐defendants, Sp. App. at 6,

and yet the PSR states that Desnoyers not only ʺorganized the illegal work,ʺ but also

approached a co‐defendant about starting a company for which Desnoyers would

perform the air monitoring, PSR ¶ 35. Finally, the district court found that Desnoyers

ʺhad no direct supervisory or managerial control over the abatement workers,ʺ Sp. App.

at 7, despite explicit recitations in the PSR that Desnoyers was the ʺGeneral Managerʺ of

three projects in the conspiracy count, for which he ʺsolicitedʺ two co‐defendants to

participate as abatement contractors, PSR ¶ 35. Additionally, according to the PSR,

Desnoyers ʺcreated fraudulent records, and billed clients for workʺ he never completed,

‐5‐ PSR ¶ 19, and he testified that he disbursed unlawful proceeds from some of the

abatement projects, App. at 191.

A court deciding whether to apply a four‐level organizer or leader

enhancement under § 3B1.1(a) should consider factors including ʺthe exercise of

decision making authority, the nature of participation in the commission of the offense,

the recruitment of accomplices, the claimed right to a larger share of the fruits of the

crime, the degree of participation in planning or organizing the offense, the nature and

scope of the illegal activity, and the degree of control and authority exercised over

others.ʺ U.S.S.G. § 3B1.1 cmt. n.4; see United States v. Molina,

(2d Cir.

2004). ʺAs to disputed issues of fact, the district court must make findings with

sufficient clarity to permit meaningful appellate review.ʺ United States v. Skys,

(2d Cir. 2011); see United States v. Huerta,

, 92‐93 (2d Cir. 2004)

(remanding the case to the district court where the record ʺle[ft] open important factual

questions regarding . . . three factors listed in application note 4ʺ).

Here, the district court adopted the PSR, but made additional factual

findings that cannot be reconciled with the PSR. The district court thus committed clear

error in failing to resolve the discrepancies between its factual findings at sentencing

and the facts set forth in the adopted PSR. United States v. Reed,

(2d Cir.

1995) (ʺWhere the sentencing judge neither clearly resolves the disputed issue nor

explicitly relies on factual assertions made in a PSR, we must remand for further

‐6‐ findings.ʺ). We therefore remand the sentence for the district court to resolve these

discrepancies and, on the basis of its findings, to make any adjustment warranted by

§ 3B1.1.

2. Substantive Reasonableness

We decline to rule on the issue of substantive reasonableness at this time

because the sentence contains procedural error. See Gall v. United States,

(2007) (the appellate court ʺmust first ensure that the district court committed no

significant procedural error,ʺ and ʺ[a]ssuming that the district courtʹs sentencing

decision is procedurally sound, the appellate court should then consider the substantive

reasonableness of the sentenceʺ).

3. Restitution

We next turn to the district courtʹs restitution order. We review awards of

restitution for abuse of discretion, United States v. Lucien,

(2d Cir. 2003),

but a district court lacks discretion under the Mandatory Victims Restitution Act

(ʺMVRAʺ) ʺto deny an award of restitution or to award restitution for anything less than

the full amount of the victimʹs losses,ʺ United States v. Walker,

(2d Cir.

2003); see also United States v. Coriaty,

(2d Cir. 2002) (holding that

ʺstatutory focusʺ of MVRA is ʺmaking victims wholeʺ). It is within the discretion of the

district court to hold a defendant jointly and severally liable or to apportion liability.

See

(h) (ʺIf the court finds that more than 1 defendant has contributed to

‐7‐ the loss of a victim, the court may make each defendant liable for payment of the full

amount of restitution or may apportion liability among the defendants to reflect the

level of contribution to the victimʹs loss and economic circumstances of each

defendant.ʺ).

In holding Desnoyers proportionately liable for the losses in Count One,

the district court concluded that ʺ[t]his fourteen percent represents an approximation of

the defendantʹs share of the proceeds from the abatement/air monitoring contracts for

the projects outlined in Count 1.ʺ Sp. App. 33‐34. As discussed above, the facts in the

PSR suggest a comparable level of knowledge and participation among Desnoyers and

his co‐conspirators, and they suggest that the scheme would not have been possible

without Desnoyers and that the victims were all harmed by Desnoyersʹs willingness to

falsify air samples and perform fraudulent air monitoring. See United States v. Tzakis,

(2d Cir. 1984) (because defendant ʺwas convicted . . . for a conspiracy

encompassing the entire fraudulent scheme,ʺ he could ʺbe required to make restitution

for damage caused to all of the schemeʹs victimsʺ even if his role in scheme was

ʺcomparatively minimalʺ (internal quotation marks omitted)). The district court found

that Desnoyersʹs Count 1 co‐defendant had ʺpaid only $890.20 toward his $854,166.06

restitution obligation [on all counts]ʺ in the years since his sentencing. Sp. App. 29. In

light of this observation, it was an abuse of discretion for the district court to then

impose only a prorated share of the Count 1 restitution on Desnoyers. By doing so, the

‐8‐ district court elevated Desnoyersʹs interests over those of his victims, requiring the

victims, rather than Desnoyers, to bear the cost of his co‐conspiratorʹs failure to bear his

share.

4. Request for Reassignment

Finally, we deny the governmentʹs request to order that the case be

reassigned to a new judge on remand. ʺ[R]esentencing before a different judge is

required only in the rare instance in which the judgeʹs fairness or the appearance of the

judgeʹs fairness is seriously in doubt.ʺ United States v. Cossey,

(2d Cir.

2011) (per curiam) (internal quotation marks omitted). Reassignment is not ordinarily

warranted merely because ʺa sentencing judge has been shown to have held erroneous

views.ʺ United States v. Bradley,

, 782 n.9 (2d Cir. 1987). The errors set forth

above do not reflect any bias on the part of the district judge, and matters of judicial

efficiency counsel against reassignment. See United States v. Robin,

(2d Cir.

1977) (en banc) (per curiam) (ʺA judge who has presided over a lengthy trial often gains

an intimate insight into the circumstances of the defendantʹs crime, which may prove

uniquely useful in determining the sentence to be imposed, whereas no such reason

would normally exist upon sentencing after a guilty plea.ʺ).

‐9‐ Accordingly, we REMAND the case with instructions to the district court

to vacate the sentence and resentence the defendant in a manner not inconsistent with

this order.

FOR THE COURT: Catherine OʹHagan Wolfe, Clerk

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