Unpublished Disposition, 888 F.2d 130 (9th Cir. 1988)

MEMORANDUM^* 

Gordon Strube appeals from the judgment entered following the denial of his motion to withdraw his guilty plea. Strube seeks reversal on two grounds:

One. The district court failed to establish that there was a factual basis for the plea of guilty.

Two. The district court abused its discretion in denying the motion to withdraw the guilty plea because the record shows that the government breached the plea agreement.

* Gordon Strube founded Consolidated Aeronautics Corporation (CAC) in 1956 and has acted as its president and chief executive officer since its inception. CAC sold aircraft parts to the United States Government during 1985 and 1986. In 1987, the United States Attorney's office for the Central District of California began a grand jury investigation of CAC and four of its employees for violations of 18 U.S.C. §§ 3, 1001 and 287.

In March of 1988 Strube expressed to his attorney a desire "to see whether I could voluntarily come forward and plead guilty to some offense in order to prevent the indictment of as many of my colleagues as possible."

On March 11, 1988, Strube and the codefendants entered into a verbal plea agreement with the United States. On March 25, 1988, the government filed a five-count information charging Strube, Ronald Guy and CAC with conspiracy to defraud the United States, falsely certifying "used, reconditioned and refurbished" parts as "new, unused and unaltered surplus" presenting false claims to the government for those parts and making false statements to the government.

A written plea agreement was executed on April 11, 1988. Strube agreed to plead guilty to counts two, three and five of the information as an accessory after the fact. Count two of the information charges that on or about April 15, 1985, Strube comforted and assisted his codefendants in submitting false certifications to the U.S. Government. Count three charges that on or about April 4, 1986 Strube comforted and assisted his codefendants in presenting false claims for payment. Count five charges that on or about March 20, 1986, Strube comforted and assisted his codefendants in presenting false claims for payment. Each count alleges that Strube hindered and prevented the apprehension, trial and punishment of the codefendants by failing to disclose what he knew of the activity.

In exchange for the guilty pleas, the government agreed that "no further criminal charges will be brought against CAC or its employees." In addition, the government promised Strube that it would "not recommend at the time of sentencing a total period of incarceration of more than one year."

On May 9, 1988 Strube pled guilty to counts two, three and five. Before accepting the plea, the district court inquired of both parties in order to establish that there was a factual basis for the plea. After engaging in a dialogue with Strube, the court accepted the plea. Strube filed a written factual basis for his plea on the same day.

In its sentencing memorandum filed July 20, 1988, the government recommended that Strube be sentenced to "at least one year" in prison. Strube filed a motion to withdraw his guilty plea on August 8, 1988. Strube argued that the government breached the plea agreement by asking the court to sentence him to "a minimum of one year in prison", despite "the prosecutor's written commitment to request a maximum of one year in prison" (emphasis in original). Strube also claimed that there was not a sufficient factual basis to support his plea of guilty.

The district court denied the motion on August 15, 1988, stating that it was not influenced by whether the recommendation was for "at least" or for "not more than" one year. The court sentenced Strube to 2 years (the first six months to be served in a community treatment center, the remainder suspended), five years probation and a $300,000 fine.

Strube timely appeals.

II

Strube contends that the district court erred in denying his motion to withdraw his plea because there is insufficient factual basis to support his guilty plea as required by Fed. R. Crim. P. 11(f). We have conducted an independent review of the record to determine whether a factual basis for the plea existed as required by Rule 11(f).

At least a "minor investment of time and effort" is required to establish on the record that the defendant had knowledge of the crime and that he understood the consequences of his plea. United States v. Kamer, 781 F.2d 1380, 1385 (9th Cir. 1986), cert. denied, 479 U.S. 835 (1986). The record shows that the district court carefully questioned Strube prior to accepting his plea. The court asked Strube if he had read the document filed by his attorney, entitled Defendants' Factual Basis For Guilty Plea To Information, before he signed it. The court also asked Strube whether the facts set forth in the written factual basis were accurate. Strube replied affirmatively to both questions. In addition, the court required the prosecutor to state the facts he was ready to prove if the case went to trial.

The Defendants' Factual Basis describes Strube's involvement in the filing of false claims in the following language:

As President and Chairman of the Board of the company, Mr. Strube was generally aware of some of CAC's contracts with the U.S. Government during the relevant time period.

In approximately January 1986 and later, Mr. Strube learned from other officers of CAC who had primary responsibility for the U.S. Government contracting business that CAC had supplied 'newly manufactured material' to the government in connection with certain 'selector set' contracts even though the contract specifications called for the material to be 'new, unused surplus'. Further, Mr. Strube learned at that time that certification had been submitted to the government by CAC personnel which falsely affirmed that the product was 'new, unused surplus,' when, as Mr. Strube learned after the fact, the product was 'newly manufactured' material. (This applies to the contracts referred to in counts two, three and five of the Information.)

Having learned these facts, Mr. Strube, as President and Chairman of the Board of CAC, should have directed the responsible officers of CAC to notify the government contracting officer of the relevant facts. Mr. Strube acknowledges that his failure to do so was illegal and he submits this as a factual basis for his guilty pleas to counts two, three and five of the Information.

The court explained to Strube that a factual basis must exist before his plea could be accepted. The court then instructed Strube that the prosecutor would "recite briefly in the nature of an offer of proof the evidence that the Government is ready to present if this case were to go to trial as proof of the occurrence of the offenses charged in this Information." Strube was instructed "to listen carefully to Mr. Fahey's statement because when he is through with his representations, I will ask each defendant whether or not you take issue with any representations made by Mr. Fahey."

After reciting facts showing that CAC employees filed false claims regarding the parts they sold to the government, the prosecutor stated to the court that he was ready to prove that Strube "knew what was going on at the time and did nothing to stop this particular pattern; indeed, assisted by lack of action and lack of intent to put an end to this particular path and, therefore, in the Government's view, could be found guilty of 18 USC Section 3 in conjunction with the false statement."

Strube's attorney advised the court that he took "exception to the portion of the prosecutor's offer of proof that Strube knew that the information was false or participated in filing false claims." Strube's attorney then stated, however, that "we can make out a factual basis". The court was informed that the failure to report to the government that he had learned that false statements had been made by his employees "constitutes a violation of Title 18 United States Code Section 3." Thereafter, the court announced that it was satisfied that a factual basis existed and accepted Strube's plea of guilty.

In this appeal, Strube contends that "the court received absolutely no facts whatsoever to demonstrate that Strube ever committed an affirmative act assisting Guy and Consolidated in concealing their violations. All parties present labored under the mistaken assumption that mere silence was sufficient to constitute a section 3 offense."

To establish a factual basis for a violation of 18 U.S.C. § 3 under Rule 11(f), the district court must be satisfied (1) that the underlying offense occurred; (2) that the defendant had knowledge thereof; and (3) that the defendant comforted or assisted the offender "in order to hinder or prevent his apprehension, trial or punishment." United States v. Scharf, 608 F.2d 323, 325-326 (9th Cir. 1979). Strube concedes that the first two requirements are satisfied.

Strube contends that the evidence shows no more than mere silence after Strube received knowledge of his employees past criminal behavior. Strube argues that the trial court was not informed of any facts that showed that he committed an affirmative act to comfort or assist his codefendants to hinder or prevent their apprehension as required under the law of this circuit as set forth in United States v. Scharf, 608 F.2d at 326. We disagree.

The record shows that Strube concealed from the government the fact that his employees were continuing to file false claims. In United States v. Prescott, 581 F.2d 1343 (9th Cir. 1978), we held that a violation of section 3 is proved if the defendant permits another person to use her dwelling to commit a crime and conceals evidence of his continuing wrongdoing. Id. at 1353.

In the instant matter, the prosecutor was prepared to prove that, with knowledge that his codefendants had filed prior false claims, Strube permitted his employees to continue to file false claims in order to defraud the government for the benefit of CAC. In his offer of proof the prosecutor stated that " [t]here was a false claim in the amount of $66,000 submitted to the United States on or before April 4, 1986, and that is the basis for Count 3." The prosecutor further stated with respect to count five that "there was a false claim placed on the Government for approximately $19,000 on March 20, 1986, and this claim was false." These crimes occurred approximately three months after Strube was informed that his employees had filed false claims. The government was also prepared to establish that Strube "comforted and assisted" the offenders by proving that the pattern of presenting false claims continued with Strube's knowledge after he was informed of their illegal activity. This evidence clearly demonstrates more than mere silence. Rather, the record shows obstruction of justice by providing a safe harbor for the criminal action and concealing their ongoing crimes for personal or corporate profit.

The record reflects that the court's inquiry adequately established that Strube had knowledge of the offenses with which he was charged, that he comforted and assisted his employees in continuing to file false claims after he had knowledge of their prior illegal activity, and that he understood the consequences of his plea. Accordingly, the district court faithfully complied with the requirements of Rule 11(f).

III

Strube also claims that the government breached the plea agreement by recommending a one-year jail term as a minimum term rather than as a maximum period of incarceration. He argues that (1) the language in the sentencing memorandum of "at least one year" violated the express terms of the plea agreement; and (2) that the tone of the sentencing memorandum demonstrates the sentiment of the government that Strube should receive more than one year and violates the spirit of the plea agreement.

We review the denial of a motion to withdraw a guilty plea for abuse of discretion. United States v. Navarro-Flores, 628 F.2d 1178, 1183 (9th Cir. 1980). Prior to sentencing, a defendant may withdraw his plea upon a showing of a "fair and just" reason. Fed. R. Crim. P. 32(d). The right to withdraw a plea is not absolute, but should be freely granted by the trial court where defendant has met his burden to show a fair and just reason. United States v. Read, 778 F.2d 1437, 1440 (9th Cir. 1985), cert. denied, 479 U.S. 935 (1986). If the defendant does not make a showing of a fair and just reason to withdraw his guilty plea, the government need not establish that it would be prejudiced if the motion were granted. United States v. Rios-Ortiz, 830 F.2d 1067, 1069 (9th Cir. 1987). Strube contends that the prosecution's alleged breach of the plea agreement is a "fair and just reason" to withdraw his guilty plea.

In determining whether a plea agreement has been breached, contract law principles apply. Kamer, 781 F.2d at 1387. Where a promise made by the government is a significant inducement for a defendant's guilty plea, the promise must be fulfilled, Santobello v. New York, 404 U.S. 257, 262 (1971), or the judgment of conviction must be vacated upon appeal. Id. at 263. Such an inducement may affect the voluntariness of the plea. Read, 778 F.2d at 1440. Therefore, the government must be held to the literal terms of the agreement. United States v. Travis, 735 F.2d 1129, 1132 (9th Cir. 1984). We must examine what the parties reasonably understood regarding the terms of the agreement. Any dispute over those terms must be determined by objective standards. Read, 778 F.2d at 1441. The district court's finding as to the terms of the contract will not be disturbed unless it is clearly erroneous. Id. at 1440.

In arguing that the trial court should be reversed, Strube relies on Santobello. In Santobello, the Supreme Court vacated the judgment of conviction because the government had failed to comply with its promise to the accused not to recommend a sentence to the court. Id. at 262. Instead, the prosecutor recommended that the trial judge impose the maximum sentence. Id. at 259. The court reasoned that the significant role of plea bargaining in the administration of justice directs that prosecutors fulfill their "bargained for" commitments. Id. at 262.

Santobello is clearly distinguishable factually. The prosecutor's recommendation of a maximum term of imprisonment in Santobello was a clear and unmistakable breach of the promise to remain silent at the sentencing hearing, constituting a breach of the express terms of the plea agreement. Id. at 259. In the instant matter, Strube contends that the prosecutor's use of the words "at least one year" in the government's sentencing memorandum violated his agreement to recommend "no more than one year."

In opposing Strube's motion, the prosecutor stated that the government "did not intend to breach the agreement or ask for a higher term by using the words 'at least' " in the sentencing memorandum. The government's motion further states that the "use of the words 'at least' while perhaps ill-chosen, should not be seen for something it was not. Indeed the government has offered to delete those two words from the Sentencing Memorandum." (Government's Opposition to Defendant Gordon Strube's Motion to Withdraw Guilty Plea at 4.)

Thus, the prosecutor made clear in his statement to the court prior to sentencing that the government intended to rely on the terms of the plea agreement. The district court construed the prosecutor's recommendation, as clarified by his oral statements, as being in compliance with the terms of the plea agreement.

At the sentencing hearing on August 15, 1988, the court stated its reason for denying defendant's motion.

One, Mr. Fahey doesn't argue for a long prison sentence. He uses that term, I think in this context, he says, 'But for his age and health a long prison sentence would be called for.' So he's not asking for a long prison sentence.

He does say that the government submits he should be sentenced to a term of--you know, and in a certain sense it is a semantic argument because if he said he should be sentenced to a prison term of one year it amounts, I think to the same thing if you say 'at least one year.' I think it acknowledges that while he can't recommend more, he is going to recommend one year. That is what I believe and that is the way I interpret it, and I think besides that it is a very--in my view, the remedy is, too, if there were a breach to sentence before another judge without that phrase present in the sentencing memorandum and I don't believe the reference to the long prison sentence would otherwise be in order as a breach of the agreement, so for those reasons I deny the motion to withdraw the plea of guilty.

The record shows that Strube's "age and health" were significant factors in negotiating the plea agreement. "In view of Mr. Strube's health problems, it was important for me to attempt to obtain a commitment from Mr. Fahey to recommend probation for Mr. Strube." (Marmaro Declaration, attached to Defendant's Motion to Withdraw, at p 22.) However, " [t]he most that the prosecutor would offer was his agreement not to recommend more than one year in prison." Id.

"Good faith disputes of the parties as to the terms of a plea agreement are to be resolved by the district court in which the plea was originally submitted." United States v. Bornstein, 623 F.2d 1327, 1330 (9th Cir. 1980). The district court fully explored the intent of the parties concerning the terms of the plea agreement before pronouncing sentence. The district court concluded that under the terms of the plea agreement the prosecutor could not recommend more than one year, but was free to argue that the sentence sould not be less than one year. The district court's interpretation of the intent of the parties was not clearly erroneous. The district court did not abuse its discretion in denying Strube's motion to withdraw his plea of guilty.

AFFIRMED.