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United States v. Serhant

July 26, 1984

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
ROBERT SERHANT, DEFENDANT-APPELLANT



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 83 CR 323 -- William T. Hart, Judge.

Author: Cummings

Before CUMMINGS, Chief Judge, WOOD and COFFEY, Circuit Judges.

CUMMINGS, Chief Judge. This is an appeal by Robert Serhant from the fifteen-year prison sentence (composed of three consecutive five-year terms) and consecutive five-year probation term with restitution condition, imposed on June 28, 1983, after Serhant pleaded guilty to four counts of mail fraud in violation of 18 U.S.C. ยง 1341.

The events culminating in the mail fraud charges to which Serhant pleaded guilty arose out of Serhant's activities as founder and president of Financial Partners Ltd., an investment company which Serhant fraudulently represented would invest in United States Treasury Bills but which in fact invested in much riskier futures market investments. Serhant's fraudulent representations resulted in losses totalling millions of dollars to several hundred investors.*fn1

Serhant's guilty plea was entered pursuant to a plea agreement with the United States Attorney. The plea agreement contained the following provisions relevant to this Court's inquiry: (1) the government agreed not to oppose Serhant's release on his own recognizance pending sentencing; (2) Serhant acknowledged that his maximum potential sentence for the four counts was twenty years in prison, a $4,000 fine,*fn2 and restitution as a condition of probation; (3) the government accepted Serhant's offer if cooperation with regard to matters involving Financial Partners; (4) the government agreed to apprise the district court of "the nature, scope and extent of defendant's conduct regarding the charges against him, and related matters, including all matters in aggravation and mitigation relevant to the issue of sentencing" and specifically the extent, value and candor of Serhant's cooperation (A11-12); (5) the government was free to recommend the maximum prison sentence; (6) the government agreed that it would not bring other charges against Serhant in connection with his investment activities.*fn3

Serhant does not challenge either the plea agreement or the legality of his guilty plea itself. He seeks only to have his sentence vacated and the case remanded to another district court judge for resentencing. He raises four major claims of error in support of vacation: (1) the use of victim impact statements in connection with his sentencing violated due process; (2) he was denied his right of allocution; (3) the restitution order is vague and uncertain and therefore improper; and (4) his sentence is disproportionate to his crime and therefore violates the Eighth Amendment's prohibition against cruel and unusual punishment.

Before reaching these claims, it is necessary as a threshold matter to determine the scope of review on this appeal. Each of the parties urges that a different standard is the appropriate one. The government argues that our scope of review is quite narrow, relying on case law which states that sentence within statutory limitations may be challenged on review only if the lower court relied on improper or unreliable information in exercising its sentencing discretion or failed to exercise its discretion at all. E.g., United States v. Ely, 719 F.2d 902, 906 (7th Cir. 1983), certiorari denied, 465 U.S. 1037, 104 S. Ct. 1313, 79 L. Ed. 2d 710; United States v. Main, 598 F.2d 1086, 1094 (7th Cir. 1979), certiorari denied, 444 U.S. 943, 62 L. Ed. 2d 311, 100 S. Ct. 301 . Serhant, on the other hand, insists that this case really challenges the manner or procedure by which the district court determined the sentence, and is subject to much broader appellate review. Dorszynski v. United States, 418 U.S. 424, 443, 41 L. Ed. 2d 855, 94 S. Ct. 3042 ; United States v. Harris, 558 F.2d 366, 372 (7th Cir. 1977).

We find it unnecessary to resolve the apparent conflict between these two standards, because in this case, at least, there is no actual conflict. To the extent Serhant's claims are procedural, they allege errors which are encompassed within the improper or unreliable information or the abuse of discretion categories of the Ely standard. For instance, Serhant claims that the victim impact information available at sentencing should have not been used because it was improper or unreliable or both; and Serhant's claims that the district judge denied Serhant the right of allocution or issued an improper restitution order or disproportionate sentence imply that the judge abused his discretion. See Ely, 719 F.2d at 906.

It is apparent, then, that in this case, at least, the two "conflicting" standards really do not conflict but instead govern two separate aspects of our inquiry. Our review of a sentence within statutory limitations is narrow in the sense that we may review the sentence only with regard to two factors: whether it is (1) set in reliance on proper information and (2) within the proper bounds of judicial discretion. However, to decide whether these two factors are present, we may subject the sentencing process to "careful scrutiny." Dorsynski, 418 U.S. at 443;*fn4 see also United States v. Scalzo, 716 F.2d 463, 471 (7th Cir. 1983).With this guideline in mind, we now consider each of Serhant's claims.

I. Victim Impact Statements

In determining the appropriate sentence for Serhant, the district court had access to a variety of information, including factors in both aggravation and mitigation. A presentence report, which was compiled by a federal probation officer, included: a narrative description of the details of Serhant's offense and its discovery; a victim impact statement and recommendation for the maximum twenty-year sentence prepared by the government counsel; a one-paragraph victim impact statement prepared by the probation officer and summarizing conversations with investors who lost money in Serhant's scheme; the probation officer's sentencing recommendation (submitted to this court in camera); a verbatim statement of Serhant's explaining his version of the facts of the offense; a summary of Serhant's personal and financial history; the parole officer's evaluation of Serhant; and Parole Guidelines and statistical Federal Court Sentencing data. Attached to the report were copies of about twenty letters submitted by victims of the scheme to the parole office in response to government counsel's solicitation. In mitigation, Serhant presented the court with several letters of commendation.

A hearing in aggravation was conducted on June 2, 1983, at which seven victims appeared as witnesses and were subjected to cross-examination by Serhant's attorney.*fn5 At the sentencing proceeding on June 28, the attorney representing various individuals who filed civil suits in connection with the scheme advised the court of Serhant's full cooperation with them. Serhant's attorney and Serhant himself also addressed the court at this time.

Serhant challenges his sentence in part on the basis that the victim impact statements available to the court were highly inflammatory, unverified and unreliable, so that the district court's reliance on them in setting Serhant's sentence violated due process. Serhant also claims that the use made of victim impact materials in connection with his sentencing violated Section 3 of the Victim and Witness Protection Act of 1982, Put. L. 97-291, 96 Stat. 1248, 1249. Section 3 amended Fed. R. Crim. P. 32(c)(2) by mandating that the presentence report in federal criminal cases contain "information concerning any harm, including financial, social, psychological, and physical harm, done to or loss suffered by any victim of the offense; and * * * any other information that may aid the court in sentencing, including the restitution needs of any victim of the offense." 96 Stat. at 1249; Fed. R. Crim. P. 32(c)(2)(C), (D).

Serhant suggests that the government exceeded its authority under Rule 32(c) and in so doing caused inflammatory and prejudicial victim statements to be submitted to Judge Hart, the sentencing judge. Because Judge Hart relied on those statements in determining the sentence, Serhant asserts, it was imposed in violation of due process. Serhant claims the government exceeded its authority by (1) soliciting and then submitting to Judge Hart inflammatory and prejudicial victim statements, and ...


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