United States District Court, N.D. Illinois, Eastern Division
May 6, 2005.
UNITED STATES OF AMERICA, Plaintiff,
PETER A. LOUTOS, SR., Defendant.
The opinion of the court was delivered by: WILLIAM HART, Senior District Judge
MEMORANDUM OPINION AND ORDER
In 2001, an indictment was returned charging defendant Peter
Loutos and five codefendants with one count of a money laundering
conspiracy, eight substantive counts of wire fraud,*fn1 and
seven substantive counts of money laundering. On October 30,
2002, however, Loutos pleaded guilty to one count of a
superseding indictment charging him with making a false statement
on an application for the purpose of influencing a federally
insured bank in violation of 18 U.S.C. §§ 1014 and 2.*fn2
The preliminary Sentencing Guideline calculation contained in the
Plea Agreement determined a total offense level of four and a criminal history category of I for a sentencing range of zero to
six months. At the time of the plea colloquy, the court accepted
Loutos's plea of guilty, but deferred ruling on acceptance of the
Plea Agreement itself until after consideration of the
Presentence Report ("PSR"), which was also expected to be after
the trial of the codefendants had been completed. See United
States v. Loutos, 284 F. Supp. 2d 942, 946-51 (N.D. Ill. 2003)
After hearing the evidence that was presented at the trial of
Loutos's codefendants and having considered the initial PSR, the
parties' supplemental submissions, and possible Guidelines
applications, on January 23, 2003, the court accepted Loutos's
Plea Agreement. See United States v. Loutos, 2003 WL 168627
(N.D. Ill. Jan. 24, 2003) ("Loutos I"). See also Loutos II,
284 F. Supp. 2d at 949-51 & n. 9. The question of the appropriate
sentencing range, however, was left open to be determined in
further proceedings. It was made clear that the court was not
bound by the preliminary Guidelines calculations contained in the
Plea Agreement nor the stipulations contained therein. Loutos
I, 2003 WL 168627 at *4-5. It was also made clear that
additional facts would have to be considered before a
determination was made as to the appropriate sentencing range
under the then-binding Sentencing Guidelines. See id. at
*3-10. Of particular importance to be resolved were the questions
of whether Loutos had participated in the investment fraud and, if
so, whether the investment fraud was relevant conduct or should
otherwise be considered in sentencing Loutos on the bank fraud
In Loutos I, Loutos and the government were informed of the
sentencing issues that would need to be addressed prior to Loutos
being sentenced. In light of the ruling in Loutos I, there was
a distinct possibility that Loutos would be subject to a
sentencing range higher than the 0-6 month range contemplated by
the Plea Agreement. About a month after Loutos I was issued,
Loutos moved to withdraw his guilty plea. The motion to withdraw
his guilty plea was denied. See Loutos II,
284 F. Supp. 2d 942.
As to his sentencing proceedings, Loutos was provided adequate
notice of the additional factual issues that would be considered
in determining the appropriate sentencing range under the
Guidelines. See Loutos I, 2003 WL 168627 at *2-3; United
States v. Loutos, 284 F. Supp. 2d 994, 996 (N.D. Ill. 2003)
("Loutos III"). Prior to a determination of the applicable
sentencing range, Loutos and the government were provided the
opportunity to present whatever additional evidence they desired
to present for purposes of sentencing. Loutos was provided the
opportunity to call witnesses, but instead chose to submit
certain depositions (of himself and others) that were taken in
related civil proceedings, transcripts of certain recorded telephone conversations, and some documentary evidence. See
Loutos III, 284 F. Supp. 2d at 996-97.
Loutos did not dispute that the scheme to defraud charged in
the original indictment occurred, that his codefendants
participated in it, and that it involved more than $11,000,000 of
investor funds. See id. at 998. Loutos, however, contended
that he did not knowingly participate in the scheme. See id.
at 998-99. The court, though, found to the contrary.
On the evidence before the court, it is found by a
preponderance of the evidence that Loutos was aware
that investor funds were deposited into the Lennox
Account, that they were obtained based on false
representations, and that they were being diverted to
his codefendants' personal use. It is found that
Loutos aided and abetted the investment fraud and
that he was a knowing participant. . . .
Although [codefendant] Benson was not an owner of
Lennox, Loutos committed the bank fraud by aiding and
abetting false statements to that effect so that
Benson could open an "escrow" account in Lennox's
name. That account was then used to funnel more than
$11,000,000 in unlawful proceeds from the investment
fraud and also aided that fraud by providing an
appearance that the money was safe because in an
escrow account over which an attorney had some
Id. at 1001. See also id. at 998-1001.
It was further held that the investment fraud was relevant
conduct for purposes of determining the Sentencing Guidelines
offense level for the bank fraud charge. See id. at 1002-03.
Alternatively, it was found and held that the $11,000,000 in investor losses were caused by the bank fraud and
therefore could be considered in determining Loutos's offense
level. Id. at 1003.
It was determined that Loutos had a total offense level of 21
and a criminal history category of I. That resulted in a
sentencing range of 37 to 46 months incarceration. Id. at 1005.
Loutos was sentenced to a total term of incarceration of 37
months to be followed by a three-year term of supervised release.
He was also ordered to pay a fine of $1000.00.
On appeal, Loutos contended that he should have been permitted
to withdraw his guilty plea. The Seventh Circuit rejected that
contention. See United States v. Loutos, 383 F.3d 615, 618-19
(7th Cir. 2004) ("Loutos IV"). Loutos also contended that the
court's treatment of the investment fraud as relevant conduct for
the bank fraud constituted an abuse of discretion in that the
court effectively rejected the Plea Agreement. See id. at
619-20. The Seventh Circuit also rejected this contention. "The
district court's decision here does not [a]ffect the validity of
the defendant's plea agreement nor does it [a]ffect the court's
decision to deny his motion to withdraw because the plea
agreement itself says `it is understood by the parties that the
sentencing judge is neither a party to nor bound by this
Agreement and, subject to the limitations of the sentencing
guidelines, may impose the maximum penalties as set forth. . . .'" Loutos IV, 383 F.3d at 620 (emphasis in
Loutos was sentenced in September 2003, prior to the Supreme
Court's ruling in Blakely v. Washington, 124 S. Ct. 2531
(2004). Following Blakely, and prior to the Seventh Circuit's
ruling in Loutos IV (Sept. 8, 2004), the Seventh Circuit held
in United States v. Booker, 375 F.3d 508 (7th Cir. July 9,
2004), that (absent waiver of the right to a jury determination)
it was improper to apply Guidelines enhancements based on facts
found by the sentencing judge, but not found by the jury or
admitted in a plea. Since the Guidelines sentencing range that
was applied in sentencing Loutos was based in part on additional
facts found by the court, the Seventh Circuit affirmed Loutos's
conviction but remanded the case for resentencing in light of the
Seventh Circuit ruling in Booker. Loutos IV, 383 F.3d at 620.
Loutos was released on bond pending resentencing and remains out
on bond. He was incarcerated approximately nine and one-half
months before being released on bond.
Prior to the Loutos IV remand, the Supreme Court had already
granted certiorari in Booker. See United States v.
Booker, 125 S. Ct. 11 (Aug. 2, 2004). The mandate for Loutos
IV was issued on October 21, 2004. This court held resentencing
in abeyance while awaiting the Supreme Court's decision in
Booker. The Supreme Court issued its Booker decision on
January 12, 2005. See United States v. Booker, 125 S. Ct. 738 (2005). The
Supreme Court resolved constitutional problems with the
Sentencing Guidelines by holding two statutory provisions of the
Guidelines would not be enforced.
[W]e must sever and excise two specific statutory
provisions: the provision that requires sentencing
courts to impose a sentence within the applicable
Guidelines range (in the absence of circumstances
that justify a departure), see 18 U.S.C. § 3553(b)(1)
(Supp. 2004), and the provision that sets forth
standards of review on appeal, including de novo
review of departures from the applicable Guidelines
range, see § 3742(e) (main ed. and Supp. 2004). . . .
With these two sections excised (and statutory
cross-references to the two sections consequently
invalidated), the remainder of the Act satisfies the
Court's constitutional requirements.
Id. at 764.
Following the Supreme Court's ruling in Booker,*fn3 the
parties were provided the opportunity to address the question of
appropriate procedures for resentencing Loutos, as well as what
factors and possible additional evidence should be considered in
resentencing Loutos. Although not clearly articulated, defendant
apparently contends that the court should again hear evidence on
the question of whether he is responsible for the $11,000,000 in
losses and that proof beyond a reasonable doubt should be required in order to attribute that loss to him. Apparently in
the alternative, defendant suggests that, consistent with the
Plea Agreement and in order to avoid the need for a lengthy
evidentiary hearing, the court simply sentence defendant to the
time he has already served. In his brief, defendant also sets
forth some facts about his family, education, and work history,
his own health, and his wife's poor health, apparently suggesting
that these factors also be considered in determining his new
sentence. In response, the government sets forth that, consistent
with the Plea Agreement and its obligations thereunder, it
continues to take the position that the investment fraud is not
relevant conduct and that defendant should be sentenced based on
a 0-6 month sentencing range. The government concedes that the
investment fraud involved a $11,000,000 loss, but contends that
should not be considered when sentencing this defendant.
The positions taken by the parties are inconsistent with
sentencing procedures following the Supreme Court's decision in
Booker and are also inconsistent with prior rulings in this
case which were not overturned in Loutos IV.
Contrary to Loutos's contention, Booker does not require that
all factual issues that may affect the sentence that is imposed
be proved beyond a reasonable doubt. Sentencing facts need only
be proved beyond a reasonable doubt if they would negatively affect (from the defendant's perspective) a mandatory
aspect of sentencing. Following Booker, the Sentencing
Guidelines are not mandatory and courts retain discretion to
sentence within the applicable statutory range. See Booker,
125 S. Ct. at 765-67; United States v. Schlifer, 403 F.3d 849,
853 (7th Cir. 2005). Facts affecting the statutory range must be
proved beyond a reasonable doubt or be admitted by the defendant
(in a plea agreement or otherwise). Facts establishing the
nonmandatory Guideline sentencing range may still be found by the
court by a preponderance of the evidence. McReynolds v. United
States, 397 F.3d 479, 481 (7th Cir. 2005); United States v.
Smith, 359 F. Supp. 2d 771, 773 (E.D. Wis. 2005). "As a
practical matter, . . . sentences would be determined in the same
way [as before Blakely and Booker]; the only change would be
the degree of flexibility judges would enjoy in applying the
guideline system." McReynolds, 397 F.3d at 481.
Under the present post-Booker sentencing regime, the district
court first determines the sentencing range under the Sentencing
Guidelines. Any factual issues that are not conclusively
established by a trial, plea agreement, or stipulation are
resolved by the court. Then, taking into account any pertinent
factors set forth in 18 U.S.C. § 3553(a), the court determines
whether to sentence within the Guidelines sentencing range. The
court is not bound to sentence within the range, but any decision to sentence outside the range must be reasonable.
See United States v. George, 403 F.3d 470, 472-73 (7th Cir.
2005); Smith, 359 F. Supp. 2d at 772-73.
Here, the court previously resolved all factual and legal
issues regarding the applicable sentencing range under the
Guidelines. As previously discussed, Loutos was already provided
a full opportunity to present evidence supporting his factual
contentions regarding the appropriate Guidelines sentencing
range. Neither due process nor the Seventh Circuit's remand
requires that that process be reopened. Loutos will not be
provided a second opportunity to present evidence purportedly
showing that he did not knowingly participate in the investment
scheme. Neither Loutos nor the government point to any case law
from before or after the Loutos III ruling that convinces this
court that it should modify the findings or holdings of Loutos
III. The difference on remand is that the applicable sentencing
range will no longer be treated as being binding and mandatory.
At the upcoming sentencing hearing, Loutos and the government may
argue, based on any appropriately considered factor, that the
court should sentence Loutos below or above the sentencing range.
As to new and pertinent facts upon which Loutos may rely, Loutos
should promptly inform the probation officer. A sentencing hearing will be held on June 8, 2005 at 11:30 a.m.
By May 31, 2005, the probation officer shall provide the court
with a supplemental PSR, including any updated information and
any recommendation regarding the sentence to be imposed.
IT IS THEREFORE ORDERED that sentencing for defendant Loutos is
set for June 8, 2005 at 11:30 a.m. By May 31, 2005, the probation
officer shall provide a supplemental presentence report.