Unpublished Disposition, 872 F.2d 431 (9th Cir. 1988)

MEMORANDUM^* 

Diwre appeals the revocation of his probation.

On August 13, 1986, Diwre was indicted on charges of making false statements, 18 U.S.C. § 1001, and visa fraud, 18 U.S.C. § 1546. On November 4, 1986 an information charging him with student loan fraud, 20 U.S.C. § 1097(a), was filed. Also on November 4, 1986, Diwre pled guilty to the visa fraud and student loan fraud counts pursuant to a plea agreement. Both the government and defendant recommended a term of probation to the court, the false statement count was dismissed, and the government "agree [d] not to pursue via prosecution any additional charges against the defendant arising out of investigation of student loan fraud," 18 U.S.C. § 1001 and 20 U.S.C. § 1097(a).

As part of the factual basis for the plea, the government submitted that on at least nine occasions in 1982 and 1983 Diwre claimed to possess a 'legal immigrant' or 'eligible non-citizen' status in furtherance of his applications to obtain federally-funded or federally-guaranteed loans or grants, and that Diwre obtained at least five federally-guaranteed student loans and three federally-funded student grants, totalling approximately $6,776.

On December 1, 1986, Diwre was sentenced to five years probation, and required to make restitution to the government.

Meanwhile, unknown to government investigators, from 1984 to 1986 Diwre submitted in excess of twenty student aid applications, each falsely representing him to be either a United States citizen or an eligible non-citizen. And in January, 1987, after he had been sentenced to probation (but while he remained incarcerated), he sent his wife, Rita Diwre, to Arizona State University's Comptroller's Office with a letter purportedly authorizing her to "obtain, sign, and complete all transactions." She obtained a check in the amount of $2,502.00 in federal grant and loan aid. These funds were later received by Diwre. In March, 1987, Diwre signed a promissory note for the loan.

After Diwre told his probation officer that he had been attending ASU, investigators determined that Diwre had received federal student aid there. On May 26, 1987, a petition to revoke Diwre's probation was filed on the grounds that he had committed student aid fraud.

A probation hearing was held on May 9, 1988. On May 24, 1988, the court filed an order finding a probation violation. On June 23, 1988, following another hearing, Diwre's probation was revoked and his sentence of two years imprisonment was confirmed, with credit for time served in custody and the possibility of a reduced sentence in the event deportation orders against him become final.

A district court's decision to revoke probation is reviewed for abuse of discretion. United States v. Dane, 570 F.2d 840, 843 (9th Cir. 1977).

The substantive standard governing probation revocation is one of fundamental fairness. Gagnon v. Scarpelli, 411 U.S. 778, 782 (1978). Probation can be revoked if, at any time during the term of probation, the defendant violates a condition of probation. 18 U.S.C. § 3565(a). The district court judge must be "reasonably satisfied" that a violation has occurred. United States v. Marion, 564 F.2d 867, 871 (9th Cir. 1977).

When imposing a sentence of probation for any federal offense, the court shall provide as a mandatory condition "that the defendant not commit another Federal, State, or local crime during the term of probation." 18 U.S.C. § 3563. The district court found that Diwre violated this condition when he knowingly and willfully obtained student aid funds by fraud or false statement, a crime under 20 U.S.C. § 1097(a).¹ 

Specifically, the court found that:

after being placed on probation, in further violation of 20 U.S.C. § 1097(a), he knowingly received $2,502.00. Receipt of funds is a separate criminal offense and the defendant knew that his status entitling him to receive any funds had been revoked by his conviction and placement on probation. Indeed, he later so acknowledged to his probation officer and to the assistant U.S. Attorney.

Order of May 24, 1988, p. 2-3. Further, the district court held that the probation revocation was not a "prosecution" within the meaning of the plea agreement, and was therefore not barred by the plea agreement. And even if the probation revocation were a "prosecution," the court noted it was not the intention of the parties that the plea agreement bar prosecutions for future student loan fraud, only for past violations.

Diwre argues that the conduct for which his probation was revoked, receipt of loans fraudulently applied for, was not a criminal act in violation of 20 U.S.C. § 1097(a). He made no false statement during his probation term, but merely picked up loan funds for which he had fraudulently applied prior to entering into the plea agreement or being placed on probation. Section 1097(a) reads:

Any person who knowingly and willfully embezzles, misapplies, steals, or obtains by fraud, false statement, or forgery any funds, assets, or property provided or insured [under certain federal programs] shall be fined not more than $10,000 or imprisoned for not more than 5 years, or both; ....

The district court found that the receipt of funds is a separate criminal offense, and that Diwre had committed a crime during the term of his probation. Defendant has presented no contrary authority. The statute prohibits obtaining of funds by false statement, and Diwre did obtain funds in January, 1987, completing the crime. Since we review only for abuse of discretion, since the district court need only be "reasonably satisfied" that a violation of law has taken place, and since a plain reading of the statute supports this view, Diwre's argument fails.

Diwre further claims that even if he violated Section 1097(a), his fraudulent application had been "forgiven" by the earlier plea agreement.

To the contrary, the plea agreement did not forgive him any previous fraudulent applications. The government merely agreed not to pursue via prosecution any additional charges. In fact, not only did the government not forgive his previous fraudulent applications, it specifically demanded that the money be returned. Restitution was one condition of probation. It flies in the face of logic to think that at the same time the government was demanding that money be returned, it was forgiving future fraudulent receipt of funds.

Even if the government did not forgive his fraudulent loan applications, Diwre contends, it at least sent him confusing signals and misled him by making the money available to him after agreeing not to prosecute him further. To the contrary, there is no evidence that the government misled Diwre.

The plea agreement makes it clear that the government did not consider Diwre eligible for loans. In the agreement Diwre admits that during his "marriage" to Jacqueline Beale she maintained a separate residence, and he remained married to Rita Diwre. The government further submitted that this sham marriage formed the basis for Diwre's visa application, and that Diwre falsely claimed to possess "legal immigrant" or "eligible non-citizen" status on loan applications. Diwre's guilty plea serves as an admission that he made false statements, that he really was not eligible for loans. It is incredible for him to claim that he still thought he was eligible in January, 1987, after pleading guilty.

In fact, at the time the government entered into the plea agreement, the investigators were apparently unaware of Diwre's aid applications at Arizona State University (ASU). Diwre certainly did not tell them he had made numerous additional applications during 1984-86. The plea agreement only mentions applications made during 1982-83. An investigator testified at the probation revocation hearing that the 1982-83 applications involved South Mountain Community College, and that only in 1987 did the government learn of Diwre's applications for aid to attend ASU. Since the government did not even know about Diwre's applications to ASU (and Diwre did not ask the government whether he was eligible for aid to attend ASU), the government could not have misled him to think that those applications had been forgiven.

At the probation hearing, Diwre went to great lengths to show that he thought he was actually eligible for the funds he obtained in January, 1987. The district court correctly doubted Diwre's credibility. The court noted "the defendant knew that his status entitling him to receive any funds had been revoked by his conviction and placement on probation. Indeed, he later so acknowledged to his probation officer and the assistant U.S. Attorney."

Diwre argues that the probation revocation is barred by the plea agreement of November 4, 1986.

He points out that in the separate proceeding against him (CR-87-245-PHX-RGS), Judge Strand dismissed student aid fraud counts as barred by the plea agreement. The dismissal of those substantive charges does not necessitate reversal of the probation revocation. As the district court pointed out, the plea agreement prevented the government from "pursuing via prosecution" additional charges resulting from the student loan fraud investigation. That was apparently what the government attempted in bringing a separate proceeding against Diwre.

The district court found that:

a petition seeking revocation of probation is not a "prosecution" within the meaning of the plea agreement. The petition to revoke probation is a proceeding initiated by the order of the court. It is commenced by the court's probation officer although, here, is jointly signed by an assistant United States attorney. The proceeding is not effectively commenced until sanctioned and ordered by the court. The defendant is not "convicted" of anything in a revocation proceeding. He is, if the evidence supports it, found to be in violation of his probation. It is not a prosecution in the sense used in the plea agreement.

Order of May 24, 1988, p. 2.

This interpretation of the plea agreement makes sense. As the district court also pointed out, the receipt of funds occurred after the plea agreement, and there is no evidence that the government intended to give Diwre a license to commit student aid fraud in perpetuity.

Lastly, Diwre asserts that Judge Strand's dismissal of Count VII in the separate proceeding should collaterally estop the "relitigation of illegal conduct." This argument fails for several reasons. First, the finding that Diwre violated a condition of his probation was made on May 24, 1988, prior to dismissal of the substantive counts in the separate proceeding, so collateral estoppel does not apply. Second, neither the issues determined nor the burdens of proof were identical.

AFFIRMED.