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United States v. Wolf

July 16, 1996

UNITED STATES OF AMERICA,

PLAINTIFF-APPELLEE,

v.

LOUIS WOLF,

DEFENDANT-APPELLANT.



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 92 C 737--Paul E. Plunkett, Judge.

Before FLAUM, RIPPLE and ROVNER, Circuit Judges.

RIPPLE, Circuit Judge.

ARGUED JUNE 12, 1996

DECIDED JULY 16, 1996

Between 1978 and October 1987, Louis Wolf defrauded Cook County and the City of Chicago by failing to pay property taxes on real estate he owned and then--when the property was sold at a tax auction--by illegally buying back the property through various fronts, thereby owning the property free and clear of tax liens. In 1993, Mr. Wolf pleaded guilty to one count each of RICO, 18 U.S.C. sec. 1962(c), and mail fraud, 18 U.S.C. sec. 1341. On December 22, 1993, the district court sentenced Mr. Wolf to one year and a day in prison, community service, restitution to the City and County, the forfeiture of various properties and proceeds involved in the fraud, and $400,000 in fines. This appeal concerns those fines.

I.

At Mr. Wolf's sentencing hearing, the district court made clear that it wished to impose monetary sanctions on Mr. Wolf in addition to the restitution necessary to make whole the victims of Mr. Wolf's crimes, Cook County and the City of Chicago. The court noted that, by hiding his ownership of abandoned and dilapidated buildings, Mr. Wolf had facilitated urban decay in some of Chicago's poorer neighborhoods and had hindered or prevented corrective action by City officials. For this reason, the court ordered Mr. Wolf to pay $400,000 in fines to two charities in the neighborhoods most affected by his crimes. The district court, however, had no statutory authority to order the payment of fines to any entity other than the United States.

More than one year later, Mr. Wolf still had not paid the fines. In February 1995, Mr. Wolf sent a letter--which the court construed as a motion under then-applicable Rule 35(a) of the Federal Rules of Criminal Procedure *fn1--to correct his sentence. Under Rule 35, "[t]he court may correct an illegal sentence at any time and may correct a sentence imposed in an illegal manner within [120 days]." Fed. R. Crim. P. 35(a). In the motion, Mr. Wolf argued that the fine was an illegal sentence: He characterized the $400,000 payment as "restitution" and argued that the court was without authority to order him to pay restitution to persons or entities that were not victims of his crimes. Mr. Wolf further argued that the court could not convert the $400,000 "restitution order" into a $400,000 "fine" payable to the United States because, he claimed, that conversion would increase the penalty he paid and would violate the holding of North Carolina v. Pearce, 395 U.S. 711 (1969). According to Mr. Wolf:

[a] fine would be an increased penalty for two reasons: First, a fine is punitive in nature wherein [sic] restitution is not. Restitution is tax deductible, whereas a fine is not tax deductible, adding to its punitive nature. Second, because the restitution order was apparently an illegal sentence ab initio, imposing a fine of even [one] dollar would be an increased penalty.

Mr. Wolf supplied no citations or other legal authority to support these assertions.

The prosecution agreed that the district court was without authority to direct the payment of a fine to any entity other than the government, but argued that, under Rule 35(a), the court could correct Mr. Wolf's sentence by ordering him to pay the $400,000 fine to the United States. The district court agreed with the government's position, and this appeal followed.

II.

A.

The district court's initial order to pay the $400,000 fine to the two charities was an illegal sentence. The court had no statutory authority to sentence Mr. Wolf to pay a fine to anyone other than the United States, and a sentence imposed outside the authority granted by statute is an illegal sentence. Hill v. United States, 368 U.S. 424, 430 (1962); United States v. ...


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