Opinion
CR 04-0455 (ADS) (JO).
September 7, 2005
REPORT AND RECOMMENDATION
In a series of separate applications, defendants Jeffrey Bassin ("Bassin"), Otto Kozak, Robert Kozak, John Flanagan ("Flanagan"), Carl Cunzio ("Cunzio"), and Patrick McFadden ("McFadden") sought to plead guilty to various charges against them in the pending Indictment. Each such proceeding was referred to me by the Honorable Arthur D. Spatt, United States District Judge, with instructions to administer an allocution pursuant to Rule 11 of the Federal Rules of Criminal Procedure, to make specific findings as to whether any plea was knowingly and voluntarily made, and to make a recommendation as to whether the court should accept it. As discussed below, I find that each defendant knowingly and voluntarily pleaded guilty and that there is a factual basis for each proffered plea.
However, for the reasons set forth below, I find that the victims of the defendants' crimes have not been afforded their statutory rights under the Crime Victims Rights Act, 18 U.S.C. § 3771 (2004) ("CVRA"). I therefore urge the court to require that no later than November 2, 2005, the government must provide affirmative notice by first-class mail or other reasonably equivalent method to all identified victims in this case of: (a) the defendants' respective pleas; (b) the release status of each defendant; (c) the sentencing date set for each defendant; and (d) the victims' right to be heard with respect to the court's acceptance of the pleas and approval of the underlying plea agreements, the defendants' release on conditions, and sentencing. Upon the government's satisfaction of the preceding requirement, I further recommend, subject to consideration of any victim's input, that the court accept each defendant's guilty plea and approve each defendant's separate agreement with the government pursuant to Fed.R.Crim.P. 11(c)(3)(A). If the court rejects some or all of the proffered pleas, I further respectfully recommend that the court require notice to all identified victims and provide an opportunity for them to be heard with respect to any further applications in this case to exclude time under the Speedy Trial Act or to set or adjourn a trial date.
I. Background
A. The Plea Allocutions
The six defendants pleaded guilty over the course of the two-week period preceding the scheduled trial date: Bassin on August 22, 2005; Otto Kozak on August 25; Robert Kozak on August 26; and Flanagan, Cunzio, and McFadden at separate proceedings on September 1. Each defendant pleaded guilty to one count of substantive securities fraud — Bassin and both Kozaks pleaded guilty to Count Two; Flanagan, Cunzio, and McFadden to Count Three — and each defendant except for McFadden also pleaded guilty to the securities fraud conspiracy charge alleged in Count One. I followed the same procedures for each of the referred plea proceedings. To avoid needless repetition, what follows is a detailed description of Bassin's allocution; the others were the same in all material respects, with minor differences noted in the margin.
On August 22, 2005, pursuant to the referral from Judge Spatt and with Bassin's informed consent, I conducted Bassin's allocution in accord with Rule 11 of the Federal Rules of Criminal Procedure. Pursuant to a written agreement with the government, a copy of which was marked as an exhibit at the proceeding (the "Agreement"), Bassin entered a plea of guilty to two counts in the indictment and the government agreed, among other things, to dismiss the remaining counts at the time of Bassin's sentence and not to bring further charges against Bassin for securities fraud and money laundering while he was employed at Donald Company for the period from approximately September 1998 through July 2002. Agreement ¶¶ 1, 5.a; see Fed.R.Crim.P. 11(c)(1)(A). The Agreement recited the potential sentencing consequences of the anticipated plea and also set forth the government's estimated calculation of the range of imprisonment pursuant to the United States Sentencing Guidelines, but both parties recognized that the calculation does not bind the court. Plea Agreement ¶¶ 1-3.
Cunzio, McFadden, and Robert Kozak each pleaded guilty pursuant to a similar agreement. The government's respective agreements with the two other defendants (Flanagan and Otto Kozak) were designated as "cooperation" agreements and differed from the other defendants' agreements in several respects, none of which is of significance to the instant discussion. The cooperation agreements did not explicitly provide for the dismissal of certain counts, but did provide that, subject to certain conditions, no further criminal charges will be brought against the defendant with respect to the pertinent disclosed criminal activity. I infer that if the cooperating defendants fulfill their obligations under their respective agreements, the government intends to move for dismissal of the otherwise unresolved counts at the time of sentencing.
As part of the allocution, I asked whether either of the crimes to which Bassin purposed to plead guilty was the "highest offense charged" for purposes of the CVRA. See 18 U.S.C. § 3771(d)(5)(C). The prosecutor responded in the affirmative, citing the substantive securities fraud count. But see 18 U.S.C. § 1956(a)(1)(B)(i), (h) (twenty-year maximum prison term for the money laundering conspiracy charged in Count Four); id. § 371 (five-year maximum for conspiracy charged in Count One); 15 U.S.C. §§ 78(j), 78 (ff) (ten-year maximum for substantive securities fraud). As discussed below, whether Bassin's plea is to the "highest offense charged" may have some significance to future proceedings, as the CVRA permits a victim to seek to re-open a plea or sentence if the victim has been denied CVRA rights and, among other conditions, "the accused has not pled to the highest offense charged." 18 U.S.C. § 3771(d)(5)(C).
No crime victim appeared at the plea proceeding. Before discussing the proposed plea with the defendant, I asked the prosecutor to describe the steps the government had taken to notify potential victims in this case of the plea proceeding pursuant to the Crime Victims Rights Act, 18 U.S.C. § 3771. Consistent with the information in the docket, see DE 118 (letter from prosecutor to Judge Spatt dated July 29, 2005), the prosecutor advised that, in light of the large number of victims in this case, the government had provided notice by means of an automated Victim Notification System ("VNS"), which I describe in greater detail below. Of immediate relevance about VNS is the fact that it provides only incomplete and passive notice of a proceeding at which a plea will be taken, meaning that a victim must take affirmative steps to learn any information that the government may have posted regarding such a proceeding. At the allocution, I expressed the concern that the government's reliance on the VNS system, as currently configured, may not satisfy the requirements of the CVRA, and therefore invited the parties to submit their respective positions on the issue by August 29, 2005. The government submitted a brief letter on September 2, 2005. DE 135.
I also discussed with the parties' counsel and with Bassin the application to this case of the Speedy Trial Act, 18 U.S.C. § 3161, because it appeared that the plea proceeding was held more than 70 non-excludable days after Bassin's arraignment. Bassin first appeared on May 14, 2005, at which time he entered a plea of guilty. DE 30. The docket does not indicate that the parties sought at that proceeding to exclude any time for purposes of the Speedy Trial Act. See id.; DE 31. No motions were pending between then and the date of the next conference on June 10, 2005; accordingly, 27 days of non-excludable time elapsed. At the conference in June, which was a public proceeding, the court excluded Speedy Trial time until September 10, 2004. DE 38. From September 10, 2004 until the next conference on October 22, 2004, no motions were pending and an additional 42 days of non-excludable time elapsed. At the October conference, which was also a public proceeding, the court excluded Speedy Trial time until December 17, 2004. DE 45. From December 17, 2004, until the next conference on February 18, 2005, no motions were pending and an additional 63 days of non-excludable time elapsed. At the public conference in February, the court excluded time until September 7, 2005. DE 81. The record does not disclose whether any victim received notification of the public proceedings at which Speedy Trial Act time was excluded, or was given the opportunity to provide views as to whether each such exclusion should be ordered. See 18 U.S.C. § 3771(a)(2), (7) (giving crime victims the rights, respectively, to "reasonable, accurate, and timely notice of any public court proceeding . . . involving the crime" and to "proceedings free from unreasonable delay").
As far as I can determine from the docket, by the date of Bassin's allocution, a total of 132 days of non-excludable time had elapsed for purposes of the Speedy Trial Act. Accordingly, as part of the allocution, I explained to Bassin his rights under the statute and he waived his right to seek dismissal pursuant to 18 U.S.C. § 3162 or to appeal a judgment of conviction on the basis of a Speedy Trial Act violation. I find that he did so knowingly and voluntarily.
I followed the same procedure with respect to the other pleading defendants (although I noted, with respect to the Kozaks, that one additional day was excluded for each as a result of motion practice regarding their pretrial detention). After I raised the speedy trial matter at Bassin's allocution, the prosecutor informed me that there may be as-yet undocketed orders applicable to all of the defendants that excluded additional time, resulting in no violation of the statute. The defendants' respective waivers may thus have been unnecessary, but the fact that each defendant did voluntarily waive his rights under the Speedy Trial Act renders the issue moot.
In conducting the allocution, I addressed Bassin personally in open court and advised him of the rights he would give up and the consequences he might face by pleading guilty; Bassin satisfactorily demonstrated his understanding of those rights and potential consequences, and nevertheless persisted in his desire to enter a guilty plea. See Fed.R.Crim.P. 11(b)(1). Bassin stated, truthfully in my view, that he was acting voluntarily and not as the result of any force, threat, or promises (other than those in the plea agreement, which was disclosed in open court). See Fed.R.Crim.P. 11(b)(2), (c)(2). Finally, Bassin explained the factual basis for his plea, and I find that there is such a basis. See Fed.R.Crim.P. 11(b)(3).
B. Compliance With The CVRA
1. Proceedings In This Case
The Indictment charges several defendants with an extensive scheme to defraud investors. Such charges inherently create the possibility that there exists a large class of persons who, if the charges are true, were "directly and proximately harmed as a result of the commission" of the offenses alleged and are therefore deemed to be "crime victims" under the CVRA. 18 U.S.C. § 3771(e). In this case, the government notes that it has identified over two hundred such crime victims. DE 118 at 1. In such circumstances, providing notice of each public proceeding to each victim is unquestionably a daunting task. However, where a court finds that the number of crime victims makes it impracticable to accord all of them their statutory rights, the CVRA permits the court to "fashion a reasonable procedure to give effect to this chapter that does not unduly complicate or prolong the proceedings." 18 U.S.C. § 3771(d)(2).
On April 13, 2005, the government applied for permission under the latter provision to provide the notifications required by the CVRA to the crime victims in this case by means of publication. DE 91. At the next conference on April 29, 2005, Judge Spatt heard oral argument on the application and rejected reliance on publication alone. Instead, the court required the government to submit a proposed notice for review, and to provide the approved notice individually to each identified victim by mail with "return receipt requested" (that is, in a way that would prompt a return mailing to the government of an acknowledgment of the delivery of the notice); the court further required the government thereafter to report the number of returned acknowledgments. See DE 99 (minute entry for conference); DE 118 (letter from prosecutor describing order entered at conference). The government submitted its proposed notice on July 29, 2005, DE 118, a copy of which is attached to this Report and Recommendation as Appendix A. At the same time, the government sought relief from the "return receipt requested" portion of the court's earlier order, and asked instead to be permitted to send the notice by first class mail, adding that "if appropriate, the government can supplement the mailing by including notice of this case in an upcoming advertisement in a national publication." Id. at 2. Judge Spatt approved the application (and also, implicitly, the notice form) on August 1, 2005. DE 120.
On August 18, 2005 — as I later learned when the government submitted its letter of September 2, 2005 — the government published a notice in USA Today that included information about the charges in this case and in related cases, and that invited any potential victim to "visit the EDNY U.S. Attorney's Website (http://www.usdoj.gov/usao/nye/vw/vicwit.htm) for further information." A copy of that published notice is reproduced in Appendix B to this Report and Recommendation. A victim taking the government up on that invitation would have found an Internet site that provided a statement of victims' legal rights under the CVRA and contact information for (and Internet links to the web sites of) a bewildering variety of organizations — but would almost certainly not have learned anything useful about the instant case or how to find out more about the it. In particular, the web site to which the published notice invited victims' attention provided no information about, and no link to, the government's VNS system described below.
Finally, in its submission to me regarding compliance with the CVRA, the government made no argument about the adequacy of the VNS system. Instead, it agreed to provide further notifications by mail to identified victims, requested that it be permitted to continue to provide such mailed notices without the "return receipt requested" feature that would increase the cost of such notification, and informed me of its newspaper publication of August 18, 2005. In the latter regard, the government noted that the USA Today notice "directs victims to the appropriate website, at which they can obtain updated information on the case." DE 135 at 2. As explained in the preceding paragraph, the latter description of the information provided in the published notice is simply incorrect.
2. The Government's Victim Notification System
In considering the extent to which the government may properly rely on VNS in fulfilling its obligations under the CVRA, I have examined that system by registering (with the government's knowledge, consent, and unstinting assistance) as a "victim" in this case and attempting to use the system as would any true victim of the offenses charged in the indictment. As described below, with the access provided by the government, I obtained information about this case both by using a computer to access VNS via the Internet and by using the telephone to obtain information from live operators and automated messages.
a. The Introductory Mailing
The first step in the government's reliance on VNS to communicate with victims is a letter that it sends to each identified victim. The letter describes the pending charges against the named defendants and provides reference numbers for the case that identify it both within the prosecutor's office and the court Clerk's file. It further notifies the recipient of the rights guaranteed by the CVRA and promises that the government will make its best efforts to ensure that those rights are accorded. Finally, the letter provides instructions about how to use the various components of the VNS system described in further detail below. A copy of the form letter used in this case is reproduced in Appendix C to this Report and Recommendation.
b. The VNS Web Site
The portal for the Internet-based part of VNS can be accessed at www.notify.usdoj.gov. Attached to this Report and Recommendation is a reproduction of some of the substantive information set forth on that public web page. That information includes an overarching description of the service that VNS strives to provide, instructions on how to use the web site as well as the VNS Call Center (for which it provides the hours of operation), a description of the case-specific information that VNS provides to crime victims and the frequency with which that information is updated, a warning that VNS cannot be relied upon to protect a victim's safety, and instructions for crime victims who do not wish to receive notification. See Appendix D. In addition, the public web page also has links to various other web sites, one of which contains information about crime victims' legal rights under the CVRA.
The public page also has a log-in screen by which victims who have received mailings such as the ones used in this case, see Appendix C, can access specific information. Examples of the information available to victims who log in (but not to the general public) are collected in Appendix E, which includes several examples of the information that was posted on the system as of August 31, 2005. In this Report and Recommendation, I make reference not only to the information reflected in Appendix E, but also to information that I obtained from VNS at other times. Because the CVRA requires "reasonable, accurate, and timely" notice of public court proceedings, and because, as discussed below, VNS generally does not send notice out at specific times but instead merely makes information available for interested victims to consult, I have made an effort to ascertain the information available on the system at several different times starting on August 22, 2005.
The VNS web site allows the user to sort a large amount of information in a variety of ways. For example, a victim can request a listing of "recent activity," "all events" or "upcoming events" in the case. Each collection of information, as available on August 31, 2005, is reproduced in Appendix E. As that collection of documents shows, a victim accessing the VNS web site would have found a great deal of information. However, that victim would not have found all of the notification information required by the CVRA, and would have been at risk of relying on some posted information that was inaccurate or, at a minimum, confusing (such as the listing of two different trial dates for the same defendant).
For example, when I accessed the system on August 22, 2005 — the date of Bassin's plea — it included a "notification event" about Bassin for that date. Although I cannot ascertain how long in advance of the plea the notice was posted on the system, I did note the information it provided, which remained on the system on August 31, 2005 and is reproduced in Appendix E. A victim actively seeking further details about Bassin on the day of his allocution (or after) would have learned from VNS no more than that "[a] hearing is scheduled on August 22, 2005, 10:00 AM in the case involving defendant(s): JEFFREY BASSIN."
Similarly, a victim relying on the system for information — even one motivated enough to check it every eight hours, the frequency with which information on VNS is updated — would have had no advance notice of the pleas offered on September 1, 2005, by defendants Flanagan, Cunzio, and McFadden. Instead they would have found a notice informing them of the following:
A trial has been scheduled on September 7, 2005, 09:30 AM, at ci in the case involving defendant(s): JEFFREY BASSIN, CARL CUNZIO, JOHN FLANAGAN, OTTO KOZAK, ROBERT KOZAK, PATRICK MCFADDEN. It is possible, however that this date may change. If you plan on attending, please check the VNS website or the VNS Call Center to verify the trial date and time. You may call this office the day before the scheduled trial for the most current trial information.
I assume "ci" is intended to refer to the United States Courthouse in Central Islip, New York. I question whether any victim would so readily have understood the same.
As of this writing — after all of the plea allocutions have taken place and at a time when the court and the parties know that, as a result, there will be no trial on September 7, 2005 — a check of the VNS web site shows that victims are still being provided that same information.
c. The VNS Helpdesk
In the course of writing this Report and Recommendation, I made several attempts to use VNS via the Internet, not all of which were successful (due, as I later came to realize, to mistakes I made in using VNS rather to problems in the system itself). When I encountered such problems, the web site provided information directing me to the "VNS Helpdesk," which is a telephone service separate from the VNS Call Center. My calls to the Helpdesk were handled by helpful and courteous VNS personnel, who, in addition to helping me resolve technical problems, also queried the computer system to give me information about the case that would have been available to me via the Internet had I succeeded in logging in. The information provided in that manner appears to have had the same limitations as the information available on the web site. For example, on August 29, 2005, in response to my inquiry about upcoming proceedings, I was told there was a sentencing proceeding on September 21, 2005, and that the trial of six defendants (those at issue here) was scheduled to begin on September 7, 2005. When I asked specifically about plea proceedings in the last two weeks of August, I was told there were none.
At the time of that call, I knew — as real victims in the case did not — that the information I had been given was partly true and partly false. It was true that a trial was then scheduled for September 7, 2005, but only as to two of the defendants named by the operator (Cunzio and McFadden, neither of whom had by then agreed to plead guilty). A real victim relying on the operator's information would thus have been under the false impression that, for example, Bassin had not pleaded guilty and was in fact preparing to go to trial a week later. Likewise, such a victim — that is, a victim taking affirmative steps to find out about scheduled proceedings in the case — would not have learned that Flanagan's plea was scheduled to take place later in the week.
c. The VNS Call Center
As distinct from the VNS Helpdesk (the resource that allows a caller to speak with a live operator during regular business hours), the VNS Call Center is a fully automated telephone system, available in English and Spanish, that guides registered victims through a series of menus from which they can ultimately obtain the same information available from the web site. The Call Center thus appears to provide no better information than the web site, and arguably no worse, although it is necessarily a much slower conduit than a computer screen for the volume of information that VNS makes available.
d. Additional Information Provided By Email
As described above, VNS as currently configured is primarily a passive system, in that it makes information available to victims but does nothing proactive to make sure they receive it. With respect to certain events, however, it appears that VNS does provide additional notification. Since registering with VNS as a "victim," I have received several unsolicited emails generated by VNS. Each informed me of a new charge filed against a defendant, and provided a brief description of the main charge, the name of the prosecuting attorney, a summary of rights provided under the CVRA, and instructions for seeking further information via the VNS system. An example is reproduced in Appendix F to this Report and Recommendation. I received no comparable unsolicited emails about scheduled or completed guilty pleas by the six defendants whose allocutions I administered.
II. Discussion
The record in this case raises several issues under the CVRA that I must address in order to make a recommendation as to whether the proffered guilty pleas should be accepted.
First, did crime victims receive sufficiently reasonable, accurate, and timely notice of the plea proceedings, either directly or by virtue of the government's reliance on VNS?
Second, if the answer to the preceding question is "no," what steps, if any, are needed to cure the deficiency, and how should the court define the class of victims as to whom such steps should be taken?
Third, how, if at all, does the fact that most of the plea agreements at issue here call for the government to dismiss with prejudice the count carrying the most severe maximum penalty affect whether, or under what conditions, the court should accept the proffered pleas?
Fourth, how, if at all, does the fact that victims were not notified of previous proceedings at which the trial date and Speedy Trial Act waivers were discussed affect whether, or under what conditions, the court should accept the proffered pleas?
I address each matter in turn below.
A. The Government's Reliance On VNS Deprived Victims Of Their Right To Notice
A guilty plea must be taken "in open court," see Fed.R.Crim.P. 11(b)(1), and must therefore proceed on notice to any crime victims who have rights under the CVRA. See 18 U.S.C. § 3771(a)(2) (providing for "reasonable, accurate, and timely notice of any public court proceeding . . . involving the crime"); see also id. § 3771(e) (defining "crime victim"); United States v. Turner, 367 F. Supp.2d 319, 326-27 (E.D.N.Y. 2005) (discussing scope of class of crime victims entitled to notification, potentially including victims of uncharged conduct). The CVRA imposes obligations on both prosecutors and the court to vindicate that statutory right to notice. Specifically, prosecutors must "make their best efforts to see that crime victims are notified of, and accorded, the rights described in subsection (a)," 18 U.S.C. § 3771(c)(1), and the court must "ensure that the crime victim is afforded the rights described in subsection (a)," id. § 3771(b).
Complying with that statutory command in a case such as this where the government has identified over two hundred victims of the charged offenses can be burdensome. However, the statute does allow that burden to be eased, even at the expense of providing full victim notification, under certain circumstances:
In a case where the court finds that the number of crime victims makes it impracticable to accord all of the crime victims the rights described in subsection (a), the court shall fashion a reasonable procedure to give effect to this chapter that does not unduly complicate or prolong the proceedings.Id. § 3771(d)(2). The government contends that the foregoing provision authorizes its reliance on the VNS system to notify victims of proceedings in this case. As explained below, I disagree.
I pause to note that the government appears to take the position that VNS is a "reasonable procedure" under subsection (d)(2) rather than a mechanism for accomplishing outright the individual notification to each victim required under subsection (a)(2). That position is not inevitable: if VNS simply replicated on a mass scale what the prosecutors would otherwise do in a single-victim case — directly contact the victim and provide the required notice — the government would have no need to invoke the "reasonable procedure" provision reserved for mass-victim cases. But whatever promise VNS may hold for the future, it is clear that as currently configured, the system does not fully satisfy subsection (a)(2), if only because it does not affirmatively contact each victim and provide notice but instead waits for victims to seek out the information to which they are entitled. I therefore analyze the sufficiency of the government's procedures under subsection (d)(2).
1. Reliance On VNS Required Advance Judicial Authorization
As a threshold matter, the government's decision to rely on VNS cannot comply with the latter provision. The statute allows reliance on an alternate "reasonable procedure" in lieu of full compliance with subsection (a)(2) only where "the court finds" that full compliance is impractical — and thus forbids a unilateral decision by the government to give up on strict adherence. Id. § 3771(d)(2). Moreover, the "reasonable procedure" that the statute permits must be one that "the court shall fashion." Id. Accordingly, even if VNS does constitute "a reasonable procedure to give effect to this chapter that does not unduly complicate or prolong the proceedings," id., the government could not properly rely on it to accomplish victim notification without advance permission from the court, which it did not secure in this case.
The latter interpretation of the CVRA not only respects the statute's text, it also reflects a sensible procedure for the administration of criminal justice for two reasons. First, the statute imposes on the judiciary an independent obligation to "ensure" that victims are afforded their rights. Id. § 3771(b). Requiring that a court make a finding of need and then fashion (or at least approve) an alternate "reasonable procedure" for notification plainly makes it more likely that the judiciary will meet its own statutory obligation. Second, a substitute "reasonable procedure" for notification that is crafted by the government alone without the court's input may later be found — as it is here — to be insufficient, resulting in a finding that victims have not been afforded their rights. In such circumstances, providing a full remedy to the aggrieved victims (such as vacating the results of the improperly conducted proceeding and seeking to re-do it later on proper notice) either may not be possible or, if possible, may have adverse consequences for law enforcement. By requiring judicial approval in advance of any reliance on a substitute procedure pursuant to subsection (d)(2), the statute guards against such problems.
The possibility is particularly plausible where, as here, a guilty plea is proffered to a magistrate judge but will not formally be accepted until the scheduled sentencing proceeding several months later. In such circumstances, the application to plead guilty formally remains open and unresolved, and the CVRA's ban on re-opening a plea as a remedy for the violation of a victim's rights, id. § 3771(d)(5), is therefore inapposite. An aggrieved victim could ask the court either to reject the proffered plea or for some other procedural relief. If, as a result, the plea was not accepted, the government might be prejudiced because of its agreement to allow other co-defendants to plead guilty in the interim in reliance on an expectation that no defendants would proceed to trial. Alternatively, if the defendant had reconsidered the decision to plead guilty based on events after the allocution that convinced him his chances at trial were better than previously thought, the invalidation of the earlier allocution as the result of insufficient notice might undermine an otherwise successful prosecution.
2. VNS, As Currently Configured, Is Insufficient
Leaving aside the requirement that the court make an appropriate finding in advance of reliance on VNS, I further conclude that VNS, as currently configured, does not constitute "a reasonable procedure to give effect to" the CVRA. Id. § 3771(d)(2). In reaching the latter conclusion, I have considered three aspects of the automated system to which victims might object: it provides inaccurate information; it provides extremely limited details about proceedings that are accurately listed; and, with respect to plea proceedings but not certain other events, it requires active inquiry by the victim to provide any notification at all. As explained below, I conclude that, at a minimum, the first and third of these attributes render the system insufficient under the CVRA.
a. The System Provides Inaccurate Information
An automated system for disseminating information can be no better than the information its operators provide, and those operators can provide no better information than they receive from those with first-hand access to it. Thus, while the promise of VNS is that it relieves the individual prosecutor of the burden of sending out individual notices to hundreds of victims in a case such as this, the trade-off is that the prosecutor must ensure that those maintaining the system receive timely and accurate updates of relevant information. The latter appears not to have happened in this case.
As my review of the VNS information posted for this case revealed, the system provided inaccurate information regarding at least some of the pleas at issue here. For example, my queries of the VNS system showed that — at least at times — it provided incorrect notice of the date of the proceeding at which Otto Kozak pleaded guilty. The mistake is undoubtedly an honest one: the plea was first scheduled for August 19, 2005, as originally posted on VNS, but was then delayed (for reasons I was not told) without the new date being timely posted.
The system also provided inaccurate information by omission. For example, to the extent that the information posted on VNS did include the date and time of certain proceedings at which some of the defendants offered their guilty pleas, the notices did not include information about where the scheduled pleas were taking place. Thus, even as to Bassin or Otto Kozak — the defendants whose plea proceedings were reflected in "notification events" with accurate date and time information — a victim relying on VNS who knew the case was assigned to Judge Spatt might well have sat in his courtroom waiting for the scheduled proceeding to begin without knowing that it had already started in a different part of the courthouse.
More substantively, in some cases VNS provided no notice at all of the proceedings at which defendants offered their guilty pleas. As of August 30, 2005, VNS provided no notice that Flanagan was scheduled to plead guilty on September 1, 2005. Similarly, Cunzio and McFadden did not agree to plead guilty until August 31, 2005 — the day before their allocutions — and as a result no notice was posted on the VNS system before the pleas were entered. Thus, a victim seeking information about this case as late as September 1, 2005 would have been informed (as I was on August 29 in response to my telephonic inquiry) that Flanagan, Cunzio, and McFadden (and indeed all of the defendants at issue here, including Bassin, whose allocution took place on August 22) were expected to proceed to trial on September 7, 2005. As an example of the harm that such inaccuracy can cause, a victim who relied on VNS on August 25, upon learning that Robert Kozak was scheduled to begin trial on September 7, might be dissuaded from seeking further details about the generic "hearing" scheduled for Robert Kozak on August 26 — the "hearing" at which he in fact pleaded guilty.
The prosecutor stated at Flanagan's plea that a notice had been posted. A check of VNS immediately after the plea allocution confirmed that, as was the case two days earlier, no notice had yet been posted of the September 1 proceeding. I have not the slightest concern that the prosecutor intentionally misinformed me; I merely assume that as a result of the current technological configuration of VNS, it takes some time for a prosecutor's instruction to post information to result in the information actually being posted in a form available to victims.
I recognize that guilty pleas are sometimes scheduled on short notice, as was the case here, and that delaying an allocution can in some circumstances jeopardize the parties' agreement to a given disposition. That too may well have been the case here: with the trial set to begin on September 7, 2005, the government may have had good reason to insist in the waning days of August that any remaining guilty pleas be entered before September 2 so that it could have certainty about whether it needed to incur the many logistical burdens associated with the start of trial. To the extent that guilty pleas in such cases cannot be scheduled in time to provide sufficient advance notice to victims, a court can consider using (or adapting as appropriate) the same curative measures discussed below in Part B of this discussion. But, for good or ill, the exigencies of real-world plea bargaining do not trump the requirements of the CVRA.
Specifically, the CVRA does not appear to provide a mechanism pursuant to which a court can simply waive the requirement of advance victim notification to accommodate the parties' timing constraints, however genuine and reasonable. If the statute required only "reasonable notice" of court proceedings, one might argue that it is indeed reasonable to provide no notice when a guilty plea must be taken immediately or not at all. But the statute requires notice that is not only "reasonable," but also "timely" and the latter requirement appears to preclude such an argument. See 150 Cong. Rec. S4260 (Apr. 22, 2004) ("Senate Debate") at S4268 (statement of Sen. Kyl) ("notice must be sufficiently given in advance of a proceeding to give the crime victim the opportunity to arrange his or her affairs in order to be able to attend that proceeding and any scheduling of proceedings should take into account the victim's schedule to facilitate effective notice").
The CVRA requires that a victim be provided notice of public proceedings that is "reasonable, accurate, and timely." Id. § 3771(a)(2). I conclude that the notice provided as to each of the plea proceedings at issue here was inaccurate, and therefore failed to meet the statute's requirements.
b. The System Provides Incomplete Information
A conceptually distinct issue is presented by the fact that VNS does not notify victims of impending guilty pleas as such. Similarly, it does not provide specific warning of such court events as bail proceedings, scheduling conferences, or exclusions of time for purposes of the Speedy Trial Act pursuant to 18 U.S.C. § 3161(h). Each such proceeding implicates a victim's interests, and at least some trigger the victim's statutorily guaranteed right to be heard if the victim attends.
By failing to provide notice about the matters expected to be addressed at a generic "hearing," VNS forces a victim who wishes to be heard on any proposed plea or on any contemplated release of the defendant to choose from several unattractive options: attending every scheduled proceeding to ensure that the relevant ones are not missed; skipping proceedings and risking loss of the right to be heard on important matters; and asking the prosecutor for additional information about each scheduled proceeding. The first option imposes needless burden on a victim, the second threatens to undermine the statute's apparent goal, and the third not only disserves the victim but also undermines the usefulness of VNS to law enforcement by multiplying rather than decreasing the prosecutor's day-to-day burdens in keeping victims informed.
To some extent, the problem is amenable to various solutions. For example, the system could be altered to provide a greater variety of "notification events." That is, the system operators could add to the menu of event descriptions such items as "Anticipated Guilty Plea" or "Application For Release On Conditions" that would provide the missing information. Of course, such changes to the system would not be effective without increased efforts by prosecutors to keep the system operators apprised of case developments in a timely fashion.
In addition, the preceding would not fully address the needs of law enforcement where, for example, the parties had negotiated a cooperation agreement that would be jeopardized by premature public disclosure. Because that circumstance is not present in this case, I need not and do not offer any opinion as to whether, for example, the government could properly seek to be relieved of its obligation to provide timely notice of a cooperator's guilty plea in the interest of protecting public safety.
That technical solutions are available and even desirable, of course, does not mean that they are required by law. The text of the CVRA gives victims the right to "reasonable, accurate, and timely notice of any public court proceeding . . . involving the crime" but does not explicitly state that such notice must provide information about the anticipated agenda of the noticed proceeding. 18 U.S.C. § 3771(a)(2).
The interpretive question thus becomes whether a requirement to provide information that a public proceeding has been scheduled specifically for the purpose of the defendant entering a guilty plea is implicit in the statute's command. That question, in turn, depends on whether the word "reasonable" in subsection (a)(2) simply modifies the words "accurate and timely" — thereby serving as a limitation on the scope of the victim's right and of the government's corresponding obligation — or whether instead it is an independent adjective that defines a right (and imposes a corresponding duty on the prosecutor) distinct from accuracy and timeliness. In other words, is a victim entitled to notice that is reasonably accurate and reasonably timely, or is the victim instead entitled to notice that is not only accurate and timely, but also reasonable?
An alternative theory would be that even if the victim's substantive right to notice does not include the right to be informed of such details, the statute's other provisions oblige the prosecutor to provide the information or the court to insure that it is communicated. However, both the prosecutor's obligation to make "best efforts" and the court's mandate to "ensure" that victims are "afforded" their rights are explicitly tied to the substantive "rights described in subsection (a)." See id. § 3771(b), (c)(1).
Assuming that the failure to provide notice of the location of a proceeding were not fatal, the difference could be critical in this case: but for that lapse, VNS did provide notices of proceedings involving, respectively, Jeffrey Bassin and Robert Kozak that were reasonably accurate and that I assume were reasonably timely (although I cannot be certain about how far in advance the notices were posted). But to the extent that VNS provided notice of "hearings" without providing any hint that those hearings would involve plea allocutions and decisions about the defendants' release on conditions, it might be viewed as having provided notice that was (more or less) accurate and timely but not reasonable. Notice that fails to inform the victim of the nature of the hearing could be considered unreasonable precisely because it keeps the victim in the dark as to whether this is the type of proceeding it is worth her while to attend. As I have previously noted in dicta addressing a related issue, "the information provided to victims [should] be sufficiently specific so that they [can] make an intelligent decision about whether to attend and seek to be heard. A victim may have little interest in attending a routine scheduling or motion conference, but may have a strong interest in being heard if the terms of the defendants release may be altered, or an order of detention revoked, at such a conference." Turner, 367 F. Supp.2d at 336.
The statute's sparse legislative history offers some insight, but nothing that allows me confidently to identify Congressional intent on the question. For example, during the Senate's floor debate on the statute, Senator Feinstein described the purpose of "the right to reasonable, accurate, and timely notice of public proceedings" as being to ensure "that you know what is happening. . . ." Senate Debate at S4261 (statement of Sen. Feinstein) (emphasis added). Senator Kyl appears to have had a similar view:
It does not make sense to enact victims' rights that are rendered useless because the victim never knew of the proceeding at which the right had to be asserted. Simply put, a failure to provide notice of proceedings at which a right can be asserted is equivalent to a violation of the right itself.Id. at S4267 (statement of Sen. Kyl) (emphasis added); see also id. at S4268 (statement of Sen. Feinstein) ("Pleas and sentencings have all too frequently occurred without the victim ever knowing that they were taking place.") (emphasis added).
The question is a close one and the court need not resolve it if it endorses my analysis of the accuracy issue above. However, to the extent that the court will conduct further proceedings in this case (and particularly if it rejects any of the proffered guilty pleas), it may eventually have to resolve the matter. I therefore recommend that the court require the government — subject to its right to be heard regarding any legal objections it may have — to include in future notices in this case information sufficient to put victims on notice of the anticipated nature of any proceeding scheduled for the purpose of conducting a plea allocution.
c. The System Is Passive With Respect To Guilty Pleas
The third problematic aspect of VNS with respect to the plea proceedings in this case is that the notice it provided victims was "passive," meaning that the system itself did not affirmatively contact registered victims to advise them of scheduled proceedings, but instead provided notice only to the extent that interested victims took steps of their own to access the system and obtain the available information. By contrast, VNS does provide "active" notification of other case events, such as the lodging of new criminal charges, by generating email messages to registered users.
As a result, I need not opine on whether CVRA requires that any automated system on which the government relies to fulfill its statutory notification obligations must provide for active contact. That is, because I know that VNS can be an active system, I need not decide whether it must have that capability to satisfy the requirements of the CVRA. Rather, starting from the proposition that the existing system can generate active notification, the question is whether the government can rely on passive notification with respect to guilty pleas. I conclude that it cannot do so consistent with the language of subsections (c)(1) and (d)(2) of Section 3771.
Under subsection (c)(1), prosecutors must "make their best efforts" to provide the notification required by subsection (a)(2). At the risk of leaving no good deed unpunished, I must conclude that by designing VNS to provide active notification of some events but not the plea proceedings in this case, the government has failed to make its "best efforts" to provide the required notification of those pleas. Similarly, subsection (d)(2) provides that when a court fashions a reasonable alternative to full compliance with subsection (a) because it "finds that the number of crime victims makes it impracticable" to do otherwise, that alternative procedure must "give effect to" the CVRA in a way that does not "unduly complicate or prolong the proceedings." Because VNS can unquestionably be configured to provide active rather than passive notice, reliance on passive notice fails to "give effect" to the statute, and requiring active notice seems unlikely to "complicate or prolong the proceedings." Thus, because the government has in this case relied on an automated system that provides only passive notification by design rather than by necessity, it has failed to comply with the CVRA.
d. Despite Its Current Failings, VNS Holds Promise For The Future
Fairness demands that any discussion of the current problems of VNS must also acknowledge the system's strengths and the government's assiduous efforts to comply with the requirements of a new statute, the full implications of which are not yet fully understood. VNS is an impressive technical achievement that manages a great deal of information and makes it available to crime victims in intuitive, user-friendly ways. Based on my research to date, it appears to be flexible and supported by helpful, knowledgeable, and dedicated personnel. The system appears, at bottom, to be the product of an institution that is committed to vindicating the rights of crime victims rather than one that views the CVRA as a distraction from its mission. As with any ambitious undertaking in its infancy, VNS suffers from unforeseen difficulties, but I am confident that those difficulties can be overcome with sufficient effort, imagination, and funding.
To the extent that VNS can be configured to provide more accurate and timely scheduling information, it is plainly a better approach than the one I explored in Turner, where I required the government to file under seal contact information for victims who had not waived their rights under the CVRA. See Turner, 367 F. Supp.2d at 328-29. Reliance on VNS better protects victims' privacy and is more likely to result in effective notification. To the extent that VNS can be configured to interface with the court's electronic filing system — so that victims who wish to do so receive email notifications of all court activity in the relevant case — it will serve even better to accomplish its purpose and meet the goals of the CVRA. It is my understanding that the government is currently exploring the possibility of making such a modification to VNS.
The latter requirement is worth noting because, to the extent VNS is insufficient, its failing may in some measure be attributable to the same legislature that made the CVRA part of our law. In enacting the statute, Congress authorized the appropriation of two million dollars for fiscal year 2005, and five million dollars for each of the next four fiscal years "to the Office for Victims of Crime of the Department of Justice for enhancement of the Victim Notification System." Pub.L. 108-405 § 103(a). It appears, however, that in the fiscal 2005 budget enacted just six weeks later, those funds were not actually appropriated. See Department of Justice Appropriations Act, 2005, Pub.L. 108-447, Div. B, tit. I, 118 Stat. 2809, 2853-72 (Dec. 8, 2004). Whether that is because the executive branch did not seek the funds or because the legislature denied them a request is a matter I have not researched. The end result is that the same Congress that recognized the need for significant funds to improve VNS did not provide them. To the extent that the legislature will before long assess compliance with the CVRA by its coordinate branches of government, see Turner, 367 F. Supp.2d at 337-38 (citing Pub.L. 108-405, § 104(b) and related legislative history), it should, in fairness, give those branches the resources needed to ensure that the law will succeed in protecting victims' legitimate interests.
The Office for Victims of Crime is a component of the Justice Department's Office of Justice Programs. The relevant portion of the Department's budget appropriates funds for over a dozen programs within the latter office's purview, but does not include any mention of VNS, the Office for Victims of Crime, or the CVRA. See id. at 2863-64.
As set forth in greater detail in Turner, enactment of the CVRA represented a compromise between legislators who favored a sweeping Victims' Rights Amendment to the United States Constitution and others who had concerns that such an approach might have unintended adverse consequences. As part of the compromise, Congress required the Comptroller General to assess the effectiveness of the statutory approach after four years and imposed certain reporting requirements on the courts. Id. at 337. The Senators who favored the constitutional approach explicitly warned that "[i]f [the statute] does not work, we will be able to come back and pursue the constitutional remedy." Senate Debate at S4266 (statement of Sen. Kyl); see also id. at S4263 (statement of Sen. Feinstein) (promising that if CVRA proves inadequate, "you can be sure as the Sun will rise tomorrow, we will be back with a constitutional amendment").
The legislature's failure to appropriate the funds authorized to improve VNS might thus be interpreted as a signal that at least some who agreed to try the statutory approach are not willing to give it a sufficient chance to succeed in protecting victims' interests before resuming their pursuit of a constitutional amendment. See also Proclamation No. 7877, 70 Fed. Reg. 17,197 (Mar. 31, 2005) (presidential proclamation advocating a constitutional amendment only five months after enactment of the statutory compromise); Prepared Remarks of Attorney General Alberto R. Gonzales, Hoover Institute Board of Overseers Conference (Feb. 28, 2005) (stating, less than four months after enactment of the statutory compromise, that a constitutional Victims' Rights Amendment is "a priority for the President and a priority for me") (available athttp://www.usdoj.gov/ag/speeches/2005/02282005_agremarkshov.htm). The failure to provide the funds needed to make VNS effective thus not only harms the very real practical interests of crime victims and of the governmental institutions that seek to serve them, but could also breed counterproductive cynicism and disrespect for the very law designed to help those victims. Such unwarranted disdain of efforts to improve the law's treatment of crime victims unfortunately needs no such encouragement. See, e.g., United States v. Holland, 2005 WL 1802868, at *15 (N.D. Ala. Jul. 11, 2005) (describing the CVRA as a "new, mushy, `feel good' statute with [a] grand title").
B. Curative Procedures
As a result of my conclusion that the government has thus far failed to provide victims the notification required under the CVRA, I must next address what curative measures, if any, the court should require before deciding whether to accept the proffered guilty pleas. In doing so, I address in turn the appropriate nature of such relief and the scope of the class of crime victims as to whom such relief is appropriate.
1. The Notice That Should Be Provided
I need not and do not make any recommendation as to whether a Rule 11 plea before a district judge can or should be accepted at the time of the plea if, as was the case here, victims are deprived of reasonable, accurate, and timely notice of the plea proceeding. The referral orders in this case require me to do no more than recommend whether the defendants' pleas should be accepted by the district judge at later proceedings. As a result, the failure to afford victims their statutory rights at the plea allocution can effectively be cured by informing them of the proceedings that took place in their absence and giving them an opportunity to participate and be heard before a final decision is made on the proposed disposition of the case.
a. Notification As To Past And Future Plea Proceedings
In Turner, as in this case, I concluded that victims had not received notification of certain public proceedings. I base my recommendation in this case on my resolution of the earlier one:
When it became apparent that the alleged victims here had not been given specific notice of the first two proceedings [the defendant's initial appearance pursuant to Fed.R.Crim.P. 5 and a later bail proceeding], I considered an adjournment as an alternative to further proceedings in violation of the victim's rights. Another alternative, and one that I concluded was preferable under the circumstances, was to order the government to provide a written summary or transcript of the proceedings to any victim who was denied notice and to make it clear that I would hear any victim with respect to whether the decision I made in the victim's absence should be reconsidered. I do not endorse this alternative as a routine substitute for conducting such proceedings without notice to victims — the statute plainly forbids such an approach. But where, as here, the result of a proceeding conducted in the victims' absence is one that does not appear to jeopardize any substantive (as opposed to procedural) right of the victim, the relief I ordered here seemed preferable to an order that would require further incarceration of a criminal defendant without a substantive ruling on whether there exist conditions of release that satisfy the requirements of the Bail Reform Act. The result at the proceeding on April 26, 2005 — at which the prosecutor reported, after complying with my earlier directive, that no victim wished to be heard — suggests that such relief sufficed to satisfy the victims without requiring further delay or inconvenience for the parties.Turner, 367 F. Supp.2d at 324.
I recommend the same approach here. Like Turner, this case involves fraud charges and allegations of economic harm to multiple investors. Also comparable to Turner, where the defendant was temporarily detained at the proceedings conducted without proper victim notification, the proceedings I have conducted in this case have not produced any result that would prejudice the interests of any victim who wished to be heard: I have informed defendants of their rights and taken their allocutions, but no determination as to whether the pleas will be accepted, and the underlying agreements approved, has yet been made. Accordingly, requiring the government to provide notice that the pleas have been offered but not yet accepted, combined with reasonable, timely, and accurate notice of the hearing at which the court will decide whether to accept the pleas and approve the agreement, should suffice to vindicate the legitimate interests of victims in this case.
I therefore recommend that the court order such notice to be provided to each identified victim. Moreover, because it appears that VNS as currently configured does not reliably and actively provide victims the kind of notice I recommend, I further recommend that the court order notice to be provided by first class mail or some reasonably equivalent substitute.
b. Notification As To Sentencing
The next proceeding in the case as to each defendant at issue here will be a hearing at which the court will both decide whether to accept the guilty plea and, if the plea is accepted, impose sentence. If the court does impose sentence at that hearing, it must also allow any victim who is present an opportunity "to be reasonably heard" on the matter of punishment. 18 U.S.C. § 3771(a)(4). That fact raises the issue of what steps, if any, the court should require in advance of the next proceeding to ensure that victims are afforded their rights in that regard. See id. § 3771(b). It appears that VNS does provide passive notice of upcoming sentencing hearings, to the extent that its operators are themselves given timely and accurate scheduling information. See Appendix D. However, for the same reasons discussed above with respect to notice of past and future plea proceedings, I recommend that the court not rely on VNS in this case and instead require the government to provide notification about the defendants' possible sentencing together with the notice I recommend be provided regarding the defendants' pleas.
I do not recommend anything more in connection with sentencing. In particular, I do not recommend that either the Probation Department or the prosecutor be required to disclose the pre-sentence investigation reports, at least without an affirmative request by a victim and an opportunity for any requesting victim and all concerned parties to have an opportunity to be heard as to whether such disclosure is appropriate or required by the CVRA. I raise the issue because at least one federal judge has proposed that Rule 32 of the Federal Rules of Criminal Procedure should be amended to require the prosecutor, on the request of any victim, to "communicate the relevant contents of the presentence report to the victim." Paul G. Cassell, "Recognizing Victims in the Federal Rules of Criminal Procedure: Proposed Amendments in Light of the Crime Victims' Rights Act," 2005 BYU L.Rev. ___ (forthcoming); see also Statement of Paul G. Cassell Before The United States Sentencing Commission at 43 (Feb. 15, 2005) (recommending that the Sentencing Guidelines be revised to require the prosecutor to "communicate the relevant contents of the pre-sentence report, including information about the impact of the offense on the victim and about restitution to the victim in the case") (available athttp://www.ussc.gov/hearings/02_15_05/cassell_testimony.pdf).
Leaving aside policy considerations about whether the Sentencing Guidelines or procedural rules should be changed to require such disclosures, there is nothing in the CVRA that explicitly requires such action, nor is there anything in the statute that appears implicitly to require it, at least in the absence of any request from a victim. Thus, in the absence of any change to applicable rules or the Guidelines, the court is under no legal obligation to ensure such disclosure. Further, whatever the merits of requiring specific forms of disclosure to ensure that all victims are given sufficient information to weigh in on disputes about the contents of a pre-sentence report that may affect sentencing — and I offer no opinion on that score — the CVRA plainly puts an interested victim in a position to get it by establishing an enforceable right to confer with the prosecutor. 18 U.S.C. § 3771(a)(5). The statute no more requires disclosure of the pre-sentence report to meet its remedial goal of giving crime victims a voice in sentencing than it does disclosure of all discovery in a criminal case to promote the goal of giving victims a voice at plea proceedings. Accordingly, on the current record, and in light of the privacy interests of defendants and possibly victims as well that might otherwise be implicated, I see no need to recommend that the court now require disclosure to all victims of any portion of the presentence investigation report.
The Senate Debate supports the view that the framers of the CVRA intended that the right to be heard would be a mechanism for victims to provide information. To the extent victims might wish to obtain information on which to base their input, the contemplated mechanism for doing so was conferral with the prosecutor rather than the implicit creation of an affirmative disclosure right:
Of course, in providing victim information or opinion [pursuant to subsection (a)(4)] it is important that the victim be able to confer with the prosecutor concerning a variety of matters and proceedings. [Subsection] (a)(5) provides a right to confer with the attorney for the Government in the case. This right is intended to be expansive. For example, the victim has the right to confer with the Government concerning any critical stage or disposition of the case.
Senate Debate at S4268 (statement of Sen. Feinstein).
2. The Victims Who Should Be Notified
Requiring the government to provide certain notice to victims begs the question of who the victims are to whom such notice must be provided. As discussed at length in Turner, 367 F. Supp.2d at 325-27, the question is more complicated than it may at first blush appear. The question can become even more complicated where, as here, the pending charges suggest the existence of separate classes of victims. Notwithstanding such complexities, as explained below I recommend that the government be required to provide notice to the entire class of over two hundred victims it has identified in this case.
According to the Indictment, all of the defendants here were stock brokers at Donald Co., a broker-dealer of securities registered with both the Securities and Exchange Commission and the National Association of Securities Dealers. Indictment ¶¶ 1, 6, 11-16. The Indictment alleges that they participated in a scheme to manipulate the price of certain stocks and engage in deceptive sales practices and improper trading practices so as to defraud investors in such stocks and thereby reap ill-gotten gains. Among the stocks involved were shares of one company called Elec Communications ("Elec") and those of another called The Classica Group, Inc. ("Classica"); the Indictment refers to both companies collectively as the "House Stocks." See id. ¶¶ 17-21.
In support of the conspiracy charge in Count One, the Indictment alleges that the defendants conspired to commit securities fraud "in connection with the purchases and sales of the House Stocks and other securities" — that is, in connection with transactions involving both Elec and Classica. Id. ¶ 26. In charging the defendants with substantive offenses, however, the Indictment separates the scheme — and, more to the point, the class of its victims — into two categories: Count Two charges the defendants with committing securities fraud "in connection with purchases and sales of the securities of Elec," id. ¶ 29, while Count Three makes the same accusation "in connection with purchases and sales of the securities of Classica," id. ¶ 31. As noted above, each of the defendants at issue here pleaded guilty to one of the substantive counts but each expects to have the other dismissed; in addition, all but McFadden pleaded guilty to Count One. To the extent the defendants admitted specific culpable conduct in order to establish a factual basis for their respective guilty pleas, some referred generically to stock transactions while others referred specifically to transactions involving either Elec or Classica but not both.
As a result, to the extent the court adopts the recommended relief described above, I further recommend that it require notification to be provided to all of the victims the government has identified. If the pleas had already been accepted, the matter might be different. For example, McFadden pleaded guilty only to Count Three, and made it clear in his allocution that by doing so he made no admission regarding any fraud with respect to sales and purchases of Elec stock. Thus, in his case, assuming his plea had previously been accepted and the dismissal of other counts approved, notice of a proceeding devoted exclusively to sentencing might need to be sent only to those victims who had been harmed by virtue of having sold or purchased shares of Classica — because at that point, only that narrower class of persons would be considered McFadden's victims within the meaning of the CVRA.
The statute defines a "crime victim" (with important caveats not at issue here, cf. Turner, 367 F. Supp.2d at 329-31) as "a person directly and proximately harmed as a result of the commission of a Federal offense or an offense in the District of Columbia." 18 U.S.C. § 3771(e). As discussed at length in Turner, 367 F. Supp.2d at 326-27, in the context of proceedings that precede a guilty plea or verdict — that is, when the defendant is presumed innocent and therefore, strictly speaking, when no one can properly be described as falling within the statute's definition, at least with respect to the defendant at bar — "it is important to avoid the pitfall of seeking to determine who is "actually" a victim . . . as a threshold for safeguarding the rights set forth in § 3771." Id. at 327. At sentencing, however, the CVRA might confer rights only on those victims harmed by the defendant's crimes of conviction. But see id. at 326 (setting forth arguments based on legislative history for including victims of uncharged conduct within the meaning of the CVRA).
Fortunately, the court need not resolve such interpretive matters for two reasons. First, because the pleas have not yet been accepted, any measures necessary to cure prior violations of the CVRA must plainly apply to all victims whose rights were violated — meaning, in these circumstances, all identified victims, including victims of all the charges to be dismissed. Second, even if it were appropriate to limit any curative measure to victims of the crimes of conviction, the fact that most defendants pleaded guilty to Count One — which alleges a conspiracy to commit securities fraud "in connection with the purchases and sales of the House Stocks and other securities," Indictment ¶ 26 (emphasis added) — means that there is no basis on the current record to distinguish among different groups of victims for purposes of enforcing the CVRA as to those defendants.
C. The Proposed Dismissal Of The "Highest Offense Charged"
As noted above, the question whether the defendants have pleaded guilty to the "highest offense charged" bears on whether the violations of the victims' notification rights might have consequences for the validity of any convictions predicated on the defendants' guilty pleas. See 18 U.S.C. § 3771(d)(5)(C). I therefore next address whether the defendants have pleaded guilty to the "highest offense charged" and, concluding that they did not, go on to address how that should affect further proceedings in this case.
The Indictment charges each of the defendants at issue here in four counts: conspiracy to commit securities fraud (Count One), two counts of substantive securities fraud (Counts Two and Three), and conspiracy to commit money laundering (Count Four). Each defendant at issue here has offered guilty pleas to either Count Two or Count Three, each of which carries a maximum prison sentence of ten years, as well as to Count One, which carries a maximum sentence of five years. As part of its agreement with each defendant, the government has agreed to move to dismiss Count Four, which would, if proven at trial, expose each defendant to a maximum prison sentence of twenty years. Compare 18 U.S.C. § 1956(a)(1)(B)(i), (h) (money laundering conspiracy) with id. § 371 (conspiracy) and 15 U.S.C. §§ 78(j), 78 (ff) (securities fraud). Moreover, the Indictment's factual allegations in support of Count Four are the same as those made in support of Counts One through Three. See Indictment ¶ 32 (realleging and incorporating by reference earlier paragraphs).
The discussion in this section does not apply to McFadden, who was not charged in Count Four of the Indictment, and who therefore did plead guilty to the "highest offense charged" by virtue of his plea to Count Three. In addition, two other defendants named in the Indictment but not at issue here were charged in Counts Five through Thirteen with substantive violations of the money laundering statute. See Indictment ¶ 35.
As noted above in footnote 1, the government has not explicitly agreed to do so with respect to Flanagan and Robert Kozak, but its intention to do so may be inferred.
I have found no case law interpreting the CVRA's use of the phrase "highest offense charged," and it appears that no other federal statute uses the same language. The closest approximation appears to be the phrase "highest offense level" as used in the Federal Sentencing Guidelines, U.S.S.G. §§ 3D1.3, 3D1.4, the meaning of which is plainly related to the penalties associated with a criminal offense. Similarly, the Guidelines' use of the phrase "more serious offense" appears to mean the offense producing the most severe sentencing consequences. See United States v. Rice, 815 F. Supp. 158, 164 (W.D.N.C. 1993) ("when sentencing under Sentencing Guideline 1B1.2(d), courts must read that guideline in light of [ Williams v. United States, 238 F.2d 215, 220 (5th Cir. 1956)] and impose a sentence for the highest object offense charged in a multi-object, single count conspiracy"), aff'd, 16 F.3d 413 (4th Cir.), cert. denied, 513 U.S. 836 (1994). I thus conclude that the CVRA's use of the phrase "highest offense charged" was likewise intended to refer to the offense carrying the most severe penalty.
Accordingly, notwithstanding the government's assurance to the contrary, the defendants have not pleaded guilty to the "highest offense charged" for purposes of the CVRA. It may well be the case that the securities fraud-related offenses charged in Counts Two and Three more accurately describe the defendants' actual culpable conduct than does the money laundering conspiracy charge in Count Four, but that does not render either of the former charges the "highest offense charged" in the Indictment.
The latter conclusion expands the potential consequences of the violation of victims' notification rights discussed above. In particular, the fact that the defendants did not plead guilty to the "highest offense charged" increases the likelihood that a victim dissatisfied with the outcome of the case could seek to undo any resulting convictions and sentences — as well as the possibility that such efforts might succeed.
The CVRA gives crime victims independent standing to vindicate their rights at both the district court and appellate level, see 18 U.S.C. § 3771(d)(1), (3), but it also places important limits on the remedies available for violations of victims' rights:
In no case shall a failure to afford a right under this chapter provide grounds for a new trial. A victim may make a motion to re-open a plea or sentence only if —
(A) the victim has asserted the right to be heard before or during the proceeding at issue and such right was denied;
(B) the victim petitions the court of appeals for a writ of mandamus within 10 days; and
(C) in the case of a plea, the accused has not pled to the highest offense charged.18 U.S.C. § 3771(d)(5).
Of the three statutory preconditions that must be met before a victim can seek to vacate an otherwise valid plea and sentence, one has been satisfied in this case (subsection (d)(5)(C)) and another will become relevant only after the court imposes sentence (subsection (d)(5)(B)). Thus, the only remaining obstacle to such a challenge is the requirement that the victim assert, and be denied, the right to be heard. As no victim has yet asserted such a right, the defendants' pleas may not be subject to challenge. On the other hand, a court might find that the failure to accord victims' their right to notice must in fairness be deemed to excuse the requirement of subsection (d)(5)(A), on the theory that Congress could not have intended a victim to be denied otherwise available remedies for the denial of one right (the right to be heard) simply because it resulted from the violation of another (the right to be notified). See Senate Debate at S4267 (statement of Sen. Kyl) ("It does not make sense to enact victims' rights that are rendered useless because the victim never knew of the proceeding at which the right had to be asserted."). It is in part to avoid making such a later attack on the defendants' convictions and sentences possible that I recommend that the court require further victim notification as set forth above in Part B of this discussion.
D. Victims' Rights With Respect To A Speedy Trial
Finally, I turn to the effect on this case of the facts relative to compliance with the statutory mandate to bring a case to trial within certain time limits. As set forth above, it appears — at least based on the proceedings recorded thus far in the docket — that each of the defendants at issue here pleaded guilty only after more than seventy days of non-excludable time had elapsed for purposes of the Speedy Trial Act. In part, that fact resulted from the conduct of proceedings at which the trial date was set, or at which exclusions of time under the Speedy Trial Act were ordered. Based on the analysis set forth above in Part A of this discussion it appears likely that some or all of those proceedings were held in violation of the victims' right to notice under the CVRA. These circumstances present yet a further illustration of how inattention to victims' statutory rights can produce confusion and uncertainty in the administration of criminal justice.
There is no way of knowing if victim notification in this case would have produced any objections to the exclusion of time under the Speedy Trial Act or to the various adjournments of the scheduled trial date. But prompting by victims interested in a speedy disposition might have made a difference in the timing of the proceedings, and might thereby have led the prosecutors to avoid a situation in which the defendants who pleaded guilty appeared to have a right to insist instead on the dismissal of all charges. A dismissal in this case would not have foreclosed the return of a new indictment, which may well explain each defendant's willingness to waive his rights in that regard. But in another case, in which an indictment was filed close to the end of the applicable period of limitations, the violation of the Speedy Trial Act might be of far greater significance, and a defendant with the opportunity to have the indictment dismissed might take advantage of that opportunity — and might, as a result, avoid not only just punishment but the obligation to make restitution to his victims.
It is not clear what remedy, if any, a crime victim would have in such circumstances. As discussed above in Part C, the fact that no victim has yet asserted her CVRA rights might preclude any meaningful remedy. See 18 U.S.C. § 3771(d)(5)(A). On the other hand, as also discussed above, the lack of notice might be found to trump the requirement of subsection (d)(5)(A) and might therefore allow an aggrieved victim to seek to re-open the plea and sentence.
Under the current circumstances, the court need not resolve that issue. Although the defendants have not pleaded guilty to the "highest offense charged," their pleas have yet to be accepted. As a result, with or without recourse to any remedial provision of the CVRA, a victim may still attend the next proceeding and seek to be heard with respect to whether the plea should or should not be accepted. 18 U.S.C. § 3771(a)(3), (4) (giving crime victims the rights, respectively, "not to be excluded from any such public court proceeding" in most circumstances, and to "be reasonably heard at any public proceeding in the district court involving . . . [a] plea").
On the other hand, if and when a plea is accepted and sentence is imposed, any victim who has been denied notification may thereafter have no effective way to vindicate her rights. The fact that no victim has asserted the right to be heard — possibly due to a failure to provide proper notice — might preclude re-opening the plea or sentence. Thus, the remedial purpose of the CVRA is largely defeated if victims are deprived notice of public criminal proceedings, even if those proceedings involve only such routine matters as Speedy Trial Act waivers. Thus, to the extent that the court may entertain further oral or written applications in this case to exclude time under the Speedy Trial Act or to adjourn a trial date (which appears unlikely unless the court rejects some or all of the proffered pleas), I respectfully recommend that it require notice to all identified victims and provide an opportunity for them to be heard on the matter.
At least one court has recognized that a written application to exclude time under the Speedy Trial Act does implicate the victim's right under the CVRA to proceedings free from unreasonable delay, notwithstanding the fact that it is made and decided without any proceeding in open court. See United States v. Tobin, 2005 WL 1868682 (D.N.H. Jul. 22, 2005).
III. Recommendation
For the reasons set forth above, I find that the victims of the defendants' crimes have not been afforded their statutory right to notification under the CVRA. I therefore urge the court to require that no later than November 2, 2005, the government must provide affirmative notice by first-class mail (or other reasonably equivalent method) to all identified victims in this case of: (a) the pertinent facts concerning each defendant's proffered guilty pleas; (b) the release status of each defendant and the fact that it may be at issue at the next proceeding; (c) the sentencing date set for each defendant; and (d) the victims' right to be heard with respect to the court's acceptance of the pleas and approval of the underlying plea agreements, the defendants' release on conditions, and sentencing. Upon the government's satisfaction of the preceding requirement, I further recommend, subject to consideration of any victim's input, that the court accept each defendant's guilty plea and approve each defendant's separate agreement with the government pursuant to Fed.R.Crim.P. 11(c)(3)(A). Finally, if the court rejects some or all of the proffered pleas, I further respectfully recommend that the court require notice to all identified victims and provide an opportunity for them to be heard with respect to any further applications in this case to exclude time under the Speedy Trial Act or to set or adjourn a trial date.
I recommend the November 2 deadline to allow 30 days before the sentencing proceeding for some of the defendants currently scheduled for December 2, 2005. The date is intended to allow sufficient time for notified victims to arrange their affairs so as to attend the proceeding if they so desire, and to submit written comments or to prepare to be heard at that proceeding on all subject as to which the victims have a right to be reasonably heard.
Notwithstanding the current limitations of VNS discussed in the Report and Recommendation, I believe that if the system is reconfigured to produce active notification ( i.e., emails affirmatively sent to registered victims), it will constitute a reasonably equivalent alternative to first-class mail with respect to any victim who has registered an email address with the system.
Finally, in the foregoing recommendation, I included the phrase, "subject to consideration of any victim's input" not simply to ensure that the convictions and sentences that result from the defendants' pleas are procedurally sound and insulated from some exotic new form of appeal. It is also intended to help ensure that any such conviction and sentence is just and reasonable.
The task I was referred was a limited one: to conduct each defendant's allocution pursuant to Rule 11, to make findings about each pleading defendant's competence and comprehension, and to determine whether the facts admitted by each defendant sufficed to establish, however minimally, the factual basis for the convictions that the parties now join in hoping will result. But the completion of my task does not necessarily put the court in a position to determine if the government's agreement with each defendant should be approved. The pre-sentence investigation report may likewise leave the court with insufficient information to make that determination.
I do not know the harm that the pleading defendants inflicted on their victims. I presume that the pre-sentence report will include some information about aggregate monetary losses, and that information may provide a useful measure of harm — but it may not. I do, however, have some idea of the sentences that the parties appear to contemplate here: some of the plea agreements include estimates of Sentencing Guidelines calculation that estimate prison sentences of two years or less. Other agreements (those characterized as "cooperation" agreements) have no such prediction, but I know from experience that their silence on the matter combined with their discussion of defendants' cooperation with the government suggests that the parties contemplate sentences that may be similar to or even below the levels specified in the other defendants' Guidelines-based estimates.
As each defendant explicitly acknowledged at his allocution, any sentencing estimate is no more than that, and is subject to the court's ultimate determination of both the applicable Sentencing Guidelines range and of a reasonable sentence that takes into account not only those Guidelines but also the other considerations set forth in 18 U.S.C. § 3553(a). Nevertheless, the plea agreements of the non-cooperating defendants all set forth explicit offense level calculations based on their views of the potentially applicable Sentencing Guidelines provisions, and also include waivers of appellate rights that further suggest the parties' sentencing expectations.
Those sentences so estimated may well represent just and reasonable punishment for the crimes the defendants have committed, and the agreements that produce such sentences — including the agreement to dismiss other counts — might also be just and reasonable. But without hearing from the victims I cannot know. For example, if the defendants' crimes caused each of the two hundred or so victims to lose a few thousand dollars, and if those losses were easily borne by victims who have ample other assets, the plea agreements may produce entirely reasonable results. Indeed, in such circumstances, all of the potentially burdensome procedural safeguards I recommend above to ensure compliance with the CVRA may produce no response at all from those whom the law defines as victims but who, in reality, have far more pressing concerns in their lives than participation in these proceedings.
On the other hand, if the losses were unevenly distributed — if some victims were defrauded of their life savings and are now doomed to struggle with poverty for the remainder of their lives and to impose burdens on their loved ones or on society — then the sentences the parties appear to contemplate might be deemed unreasonable. In such circumstances, the court may hesitate to approve some or all of the pleas resulting from the parties' respective agreements.
I hasten to make clear that I make absolutely no substantive recommendation as to how information about the harm to victims in this case might or should affect the court's determination of sentence. Rather, I note the issue because it illustrates that compliance with the CVRA is more than a procedural hurdle for prosecutors and courts. By ensuring that victims are properly notified of court proceedings and that their statutory opportunity to be heard is given practical effect, the court will ensure that it is in a position to fulfill its obligation under 18 U.S.C. § 3553(a) to impose a reasonable sentence.
IV. Objections
This Report and Recommendation will be filed electronically on the court's ECF system and is deemed served on each party as of the date of such filing. The government is directed to serve a copy on all identified victims in this case by first-class mail or other reasonably equivalent method within ten days and to file a certificate of service.
Under the applicable statute, any objection to this Report and Recommendation by a "party" must be filed with the Clerk of the Court within ten days of the filing date, and failure to file objections within this period waives the party's right to appeal any order that the district court enters on the basis of this Report and Recommendation. See 28 U.S.C. § 636(b)(1). A victim, however, is not a "party," even though the CVRA renders a crime victim the functional equivalent of a party in several important respects. Accordingly, pursuant to the All Writs Act, 28 U.S.C. § 1651, and in order to ensure an orderly and timely review by the district court of any objections that a victim might have, I direct any victim who wishes to object to this Report and Recommendation to file such objections with the Clerk of the Court, with a courtesy copy to me and to the government and the defendants, no later than October 14, 2005. Pursuant to the same authority, I further direct that if the government or the defendant does file any objection to this Report and Recommendation, the objecting party must provide a copy of the same to each identified victim by first-class mail or other reasonably equivalent method within ten days.
SO ORDERED.