Sunday, October 19, 2014

Case o' The Week: Ninth Finds No Value in "No Value" argument - Renzi and loss calculations

Rep. Rick Renzi

  $200,000 for Arizona wine?
United States v. Renzi, 2014 WL 5032356 (9th Cir. Oct. 9, 2014), decision available here.

Players: Decision by Judge Tallman, joined by Judges Callahan and Ikuta.

Facts: Before he was an Arizona Congressman, Renzi was friends and business partners with Sandlin. Id. at *3. After Renzi was elected, he sold Sandlin his share in a real estate company for a $800k promissory note. Id. 
   Sandlin also owned a tract of land near federal property in Arizona. Id. After Renzi became a Congressman, he got involved in a deal to trade federal land (something that requires Congressional action). Id. at *5. Renzi pushed the interested property group to buy Sandlin’s tract as part of this exchange – in exchange, Renzi promised to use his “free pass” to get a land trade through Congress. Id. at *5. 
  The property group accordingly bought Sandlin’s tract: Sandlin then promptly wrote a $200,000 check to “Renzi Vino,” an Arizona wine company owned by Renzi. Id. at *5. Sandlin later paid off the remainder of the $800k promissory note owed to Renzi. Id. at *5. 
  Renzi was later convicted of public corruption, insurance fraud, and racketeering; Sandlin was convicted of a subset of these counts. Id. at *5. At sentencing, the district court applied USSG § 2C1.1 and determined the value to determine the offense level was the $200k Sandlin paid to Renzi with the check to Renzi's Arizona wine company.

Issue(s): “Renzi and Sandlin challenge the district court’s calculation of values under § 2C1.1(b)(2). They content that the district court erred by concluding that the ‘value of the payment’ was $200,000 (the amount of the debt to Renzi that Sandlin paid off), rather than zero (the net value to Renzi).” Id. at *19.

Held: “[W]e hold that the district court did not err in imposing a ten-level enhancement under § 2C1.1(b)(2) to both Renzi and Sandlin.” Id. at *20.

Of Note: Guideline Section 2C1.1(b)(2) has four prongs to calculate value – the first, used here, is “the value of the payment.” Rep. Renzi argued that the guideline commentary, and the Ninth Circuit’s recent decision in White Eagle, means that the value for the guideline calculation is the net value of the benefit. Id. at *19. 
  Here, the payment (arguably) had no value: Sandlin simply owed the Congressman a debt, and paid it. Id. Judge Tallman doesn’t buy it, and concludes that while this “net value” principle may apply to other prongs in the guideline – it doesn’t wash with the first prong. Id. at *19-*20. As Renzi argued, this may create “anomalous results” in how the guideline is interpreted – but in the Ninth, prong one of this guideline is now carved out from the “net value” analysis.

How to Use: The Renzi decision is a tome, chock full of issues – none of which turn out well for the defense. One that may come up in indigent defense is “honest services” fraud. Id. at *8.
  The Ninth jury instructions recommend that the district court “specifically describe the thing of value just as it is described in the indictment to avoid a variance.” Id. at *8. Renzi complained that the district court failed to do so here, id. at *8, but the Judge Tallman counters that “the recommendation is just that – a recommendation.” Id. 
  This argument might have more traction if there actually was a variance from the “thing of value” identified in the indictment – the Ninth concedes that was the issue in its decision in Choy – but absent that error, a vague honest services instruction won’t get much traction on appeal. Id.
For Further Reading: Q: When is it good to have more drug offenders on Probation's list? 
  A: When it is a list of potentially eligible inmates, for a drug resentencing reduction. Through some great sleuthing, the ND Cal Office of Probation has bumped up the list of (potentially) eligible offenders in the district to around 600. The District Court has also helped with the resentencing effort, adopting a welcome new order that will help expedite appointments, triage eligible candidates, and make sure all inmates seeking relief will have counsel review their application. For a summary of the new ND Cal order, and a link to the order itself, see web page here.

Steven Kalar, Federal Public Defender N.D. Cal. Website at .


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