United States v. Feng Li, AKA Li Feng Zhao Hui, AKA Hui Zhao, Ru Jie Lu, AKA Ru Lu Jie

Citations: 115 F.3d 125; 1997 U.S. App. LEXIS 12175; 1997 WL 275500Docket: 1184

Court: Court of Appeals for the Second Circuit; May 27, 1997; Federal Appellate Court

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Ru Jie Lu, an immigrant from China, was convicted of multiple charges related to food stamp fraud, including unauthorized acquisition of food stamps, bank fraud, and unlawful disposal of food stamps. The jury found her guilty on four counts after a four-day trial, where Lu did not contest her actions of depositing over $3 million in food stamps into bank accounts linked to her grocery business, Shanghai Trading, Inc. Her defense hinged on her claim of ignorance regarding the legality of her actions, which was a critical point since the prosecution needed to establish that she had knowledge of the wrongdoing to secure a conviction.

Lu was sentenced to 42 months in prison, followed by four years of supervised release, a $150 special assessment, and required to pay $100,000 in restitution. On appeal, she argued that the district court made errors in evidentiary rulings, failed to allow her an opportunity to speak before sentencing, and imposed a harsher sentence than initially indicated after she asserted her innocence. The appellate court affirmed her conviction but vacated the sentence, remanding the case for resentencing. The court emphasized that, while generally ignorance of the law is no excuse, in this case, Lu had to have specific knowledge that her actions violated food stamp regulations for conviction.

Lu did not testify or present evidence during her trial. The facts were established through government witness testimonies. In September 1992, Shanghai applied for a food stamp redemption license from the USDA, naming Lu's daughter, Hui Zhao, as the owner. Zhao signed the application, accepting responsibility for compliance with Food Stamp Program regulations, including prohibitions against trading cash for food stamps. After attending a food stamp orientation class on October 6, 1992, which included warnings against trafficking, Zhao opened Shanghai but closed it three months later due to losses.

In November 1992, Lu and partners began operating the store, and she met Yi Chen, who allegedly supplied food stamps for cash. Lu and Chen entered into transactions where Lu purchased food stamps from Chen, redeeming them for cash using Shanghai's license, and returning 96% of the value while keeping 4%. From November 1992 to September 1994, Lu redeemed approximately $3.5 million in food stamps, despite minimal food sales, continuing even after the store's closure in March 1994.

After her arrest in September 1994, Lu was questioned by FBI agents, during which she admitted knowing her actions were illegal and acknowledged that the food stamps from Chen were not for food sold. Lu later contested the admission of testimony regarding Zhao's attendance at the food stamp orientation class, claiming it was irrelevant and prejudicial to her case. Witness Angela Mackey detailed food stamp licensing requirements and confirmed Zhao's attendance at the orientation, where regulations against exchanging food stamps for cash were discussed.

Department program specialist Alston testified as the second government witness, recalling his standard instruction regarding the illegality of purchasing food stamps at a discount during the October 6, 1992 class, although he had no specific memory of that session. The government introduced 27 slides used in orientation classes that informed retailers of the unlawful nature of buying and selling food stamps. Lu did not object to testimony about Zhao attending the class or Alston's instruction. However, when the government attempted to argue that Zhao's knowledge of the illegality of food stamp sales could be inferred to Lu, the trial judge denied this as speculative. The judge emphasized that it is improper to assume one conspirator's knowledge implies another's without direct evidence of communication. Lu did not object to the earlier testimony or request a curative instruction regarding the implications of Zhao's knowledge. Under Rule 52(b), an unpreserved trial error will not lead to reversal unless it is plain error affecting substantial rights. The court noted that the alleged error in admitting the testimony was neither plain nor did it affect Lu's substantial rights, as it was clear during the government's case-in-chief that the prosecutors lacked evidence connecting Zhao’s knowledge to Lu. The absence of a contemporaneous objection meant the judge was not obligated to exclude the testimony on his own initiative.

Substantial portions of the testimonies from Mackey and Alston served to provide essential background information relevant to the charges against Lu, detailing the food stamp program, licensing requirements, and Lu’s involvement in a fraudulent scheme. According to established case law, evidence that does not directly establish an offense element can be admitted to provide context for the indictment. The admission of this testimony did not infringe upon Lu's substantial rights, as any potential error was deemed harmless. The burden of proving prejudice falls on the defendant, and in this case, the evidence presented by the government—including Lu's own admission of her illegal actions and testimony from an acquaintance about her awareness of the scheme—was sufficient to demonstrate her guilty knowledge. The government did not emphasize Zhao’s attendance at the USDA orientation class during closing arguments, and the defense highlighted the lack of evidence connecting Lu to that class, suggesting it undermined her supposed guilty knowledge. Thus, Lu failed to demonstrate any prejudice resulting from the trial court’s actions, and no reversal was warranted under Rule 52(b).

Regarding Lu's right to allocution, she claimed she was denied a meaningful opportunity to address the court before sentencing, as the judge interrupted her multiple times and did not allow her to fully explain her actions. Lu sought a downward departure in her sentence due to the psychological impact of her incarceration, which the court denied.

The district judge assessed the mental state of the defendant, Ms. Lu, concluding that she had no mental health issues at the time of the offense and currently. The judge characterized her behavior as manipulative, expressing that she seeks sympathy and becomes hostile when it is not given. Despite her emotional pleas and claims of innocence regarding her involvement in a food stamp fraud scheme, the judge emphasized that the purpose of the sentencing was not to revisit the trial or discuss her guilt, but to impose a punishment for her crime. During her allocution, Lu insisted that she had not profited from the food stamp operation and described the difficulties of managing the business, including attempts to sell it due to financial losses. The judge limited her to a brief statement, indicating that while she could express herself, the session would not extend to a lengthy recount of the trial. Lu continued to assert her lack of knowledge about the illegality of her actions and expressed her suffering over the situation, highlighting the distress caused by her incarceration and the loss of her daughter's support.

The district judge curtailed Lu's allocution after approximately 20 minutes, asserting that he had heard sufficient remarks and would not continue indefinitely. Despite Lu's emotional responses, including protests about not being allowed to testify, the judge threatened to remove her from the courtroom for noncompliance but ultimately permitted her to stay if she remained quiet. Following this, the court briefly inquired whether Lu and her counsel had reviewed the presentence report before proceeding to sentencing. 

The government's position is that the court's actions should be reviewed for 'plain error' due to the lack of objection from Lu's counsel regarding the limitation imposed on her allocution. However, Lu's continuous protests during the proceedings preserved her rights under Rule 32(c)(3)(C). The judge's acknowledgment of potential appellate review suggests awareness of Lu's objections, leading to a review of the limitation for reversible error. While the right to allocution is not a constitutional right, it is considered an 'absolute right' in federal courts, allowing defendants to address the court and present mitigating information before sentencing. Historical context emphasizes the importance of this right in ensuring equitable sentencing that reflects individual circumstances.

Resentencing is warranted if a court fails to adhere to the allocution requirement of Rule 32(c)(3)(C), as established in United States v. Margiotti. In Lu's case, although she was permitted a brief opportunity to address the court, the manner in which the sentencing judge conducted the allocution was problematic. The judge's comments and interruptions created an intimidating environment, limiting Lu's ability to effectively present her mitigating information. The judge's dismissive remarks and premature termination of her allocution further compounded this issue, suggesting a lack of receptiveness to her statements. While a defendant's right to allocution is not boundless, the court must ensure that the opportunity is meaningful. In this instance, Lu's rights were not adequately upheld, leading to the decision to vacate her sentence and mandate resentencing, with a full consideration of her Rule 32 rights. Lu also requested assignment to a different district judge for resentencing, a request the government did not address due to its position against resentencing.

The Circuit's decisions reflect varying approaches to the reassignment of cases upon remand. In cases such as Sobel v. Yeshiva Univ. and United States v. Ming He, remanding to a different district judge is considered an "extraordinary remedy" reserved for unique circumstances where a judge might struggle to set aside prior views, or where reassignment is necessary to maintain the appearance of justice. Conversely, in United States v. Londono, the threshold for reassignment is less stringent, focusing on whether an objective observer might question the judge's impartiality, rather than on actual bias.

In the current case, the court found no special circumstances warranting reassignment, as Lu did not demonstrate that the district judge would fail to follow the court's directives regarding her Rule 32(c)(3)(C) rights or provide a fair resentencing. Consequently, Lu's request for reassignment was denied.

Regarding the propriety of considering Lu's conduct during sentencing, she argued that the district court improperly increased her sentence due to her assertions of innocence. Despite being given some opportunity to speak, Lu maintained her innocence, which the district court acknowledged influenced the harsher sentence imposed—42 months compared to the initially indicated lower range. The district court expressed that Lu’s statements demonstrated a lack of acceptance of responsibility and the necessity for general deterrence, indicating she was fortunate not to receive a longer sentence. The court denied Lu's request for a downward departure, emphasizing that the guideline range reflected the seriousness of her offenses.

The court addressed the defendant's claims of innocence, noting her right to protest but highlighting her failure to accept responsibility, which influenced the sentencing decision. Despite an initial inclination toward leniency, the defendant's manipulative behavior and lack of accountability led the judge to impose a mid-range sentence of 42 months’ imprisonment, with four years of supervised release, and no probation. The court affirmed its discretion to consider the defendant’s demeanor and attitude during sentencing, referencing case law that supports the inclusion of such factors. The judge's decision to increase the sentence was deemed appropriate and significantly less than a possible enhancement for obstruction of justice. The court also noted that while Lu's case is remanded for resentencing, her objections do not warrant overturning her conviction. Additionally, Lu was previously granted a judgment of acquittal on one count, and a psychiatric evaluation confirmed her competency for sentencing despite her mental health challenges. The court underscored the importance of allowing the defendant an opportunity for allocution and acknowledged the complexities introduced by her non-English-speaking status during the proceedings.