Nos.

14-10055, 14-10056

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

DAVID FOLEY,

Defendant-Appellant.


UNITED STATES REPLY IN SUPPORT OF ITS MOTION TO DISMISS
DEFENDANTS APPEAL

This Court should dismiss defendant-appellant David Foleys appeal
because he knowingly and voluntarily waived his right to appeal his convictions
and sentence, the issues he raises on appeal fall squarely within the scope of that
waiver, and defendant cannot show that he falls within the limited circumstances in
which this Court has declined to enforce such waivers. Specifically, defendant
argues that this Court should read into the plea agreement a limitation on how the
amount of loss should be calculated to which the parties did not agree, even though
the parties actually stipulated to a range under which the district court sentenced
defendant. Defendant supports his novel argument by claiming that he was
sentenced for a crime other than the one to which he admitted. That claim is
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meritless. Accordingly, this Court should grant the governments motion to
dismiss the appeal in light of defendants knowing and voluntary waiver of his
appellate rights.
ARGUMENT
This Court should dismiss defendants appeal because the three reasons
defendant offers to invalidate the appellate waiver have no merit.
First, defendants sentence was not based on an error of law. Even if
defendant was correct that his sentence was based on an erroneous Sentencing
Guidelines calculation (although it was not), such an error would not render the
sentence illegal.
Second, the government did not breach the plea agreement by arguing for an
amount of loss at or below the ceiling to which the parties stipulated, and this
Court should decline defendants invitation to read into the plea agreement a
limitation to which the parties did not agree. In fact, defendant is the only party to
have breached the plea agreement by, initially, repeatedly refusing to accept
responsibility (which resulted in the district court ultimately denying him credit for
acceptance at sentencing), and now, by filing an appeal after having knowingly and
voluntarily waived his right to do so.
Third, the terms of the plea agreement were not ambiguous as to loss. The
agreement expressly stipulated that the government could argue for a loss amount
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of up to $1,589,069, and that defendant could argue for a loss amount of $0. Both
parties argued in accordance with the agreement, and the court ultimately found a
loss amount two-thirds less than the upper amount to which the parties had agreed
and sentenced defendant accordingly. This Court should dismiss defendants
meritless appeal.
I. Defendant Does Not Claim His Waiver Was Not Knowing And
Voluntary

Defendant does not dispute that he stipulated in the plea agreement that he
had had adequate time to discuss the case, the evidence, and the agreement with his
lawyer, as well as the benefits and possible detriments of proceeding to trial. CR
129 at 8-9. Nor does defendant dispute that during the plea colloquy, he confirmed
that he had read and reviewed the plea agreement with his lawyer, that he was
satisfied with the services of his lawyer, that he was not threatened into pleading
guilty, and that he was pleading guilty freely and voluntarily. Id. at 3-4, 6, 7. The
court also confirmed that defendant had had the opportunity to discuss the plea
agreement, and in particular its sentencing provisions, with his counsel and that
defendant understood their significance. Id. at 7-8. Nor does defendant dispute
that the district court expressly advised him that he was waiving his right to appeal,
or that he acknowledged that he understood that he was waiving those rights. Id. at
17-18. Finally, defendant has not sought to withdraw his plea. In short, there is no
dispute that defendants plea was knowing and voluntary.
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II. Defendants Sentence Was Not Based On An Error Of Law
Defendant contends that this Court should decline to enforce the otherwise
valid appellate waiver because his sentence was purportedly based on an error of
law.
1
Specifically, defendant claims that the district court erred because
convergence, the principle that for a defendant to be guilty of mail fraud, he must
intend to obtain money or property from the one who is deceived, United States v.
Lew, 875 F.2d 219, 221 (9th Cir. 1989), applies at sentencing to limit the loss for
which defendant is responsible. Defendant cannot cite a single case supporting
the application of convergence to limit the calculation of loss at sentencing.
Indeed, to do so would impose a wholly foreign limitation onto the calculation of
loss.
To the contrary, as this Court has repeatedly held, loss calculations under
USSG 2B1.1 are not limited to the counts of convictions. As this Court held
most recently in United States v. May, 706 F.3d 1209 (9th Cir. 2013), [i]n the
context of sentencing, a district court is not limited to offense conduct, but rather

1
In his opposition, defendant asserts that his sentence for bank fraud was
based on the same purportedly erroneous loss calculation. To the contrary, as
defendant acknowledged in his supplemental memorandum seeking bail, the court
found no loss on that count because the collateral (the house) had a current fair
market value that exceeded the amount of the loan. CA No. 14-10055 CR 12 at 2
n.1 (noting also that all of Mr. Foleys arguments here relate to the mail fraud
count); see also Presentence Report at 100. Under the Sentencing Guidelines,
the mail fraud count drove the sentencing calculations, but defendant has not
separately challenged the bank fraud calculations.

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may consider all of the defendants relevant conduct in calculating loss under
2B1.1.
2
Id. at 1213 (emphasis added). The Court reaffirmed that: [b]ecause
relevant conduct may include a broader range of conduct than the underlying
offense conduct, a district court may properly consider[ ] charged, uncharged, and
acquitted conduct. Id. (citing United States v. Peyton, 353 F.3d 1080, 1089 (9th
Cir. 2003), overruled on other grounds by United States v. Contreras, 593 F.3d
1135, 1136 (9th Cir. 2010) (en banc) (per curiam)); see United States v. Fine, 975
F.2d 596, 601 (9th Cir. 1992) (en banc) (holding that even where a defendant
pleads guilty to only some of the counts in a multiple-count fraud indictment, the
sentencing court may still consider the losses related to the dismissed counts as
relevant conduct); see also United States v. Lawrence, 189 F.3d 838, 844-45 (9th
Cir. 1999) (permitting consideration of acts for which a defendant was acquitted);
United States v. Newland, 116 F.3d 400, 404-05 (9th Cir. 1997) (relevant conduct
includes acts underlying a reversed conviction). Accordingly, there was no error
here in basing loss on the harm done to Global VR.
Even if there was an error in the Guidelines calculation, however, defendant
waived his right to raise such a claim on appeal. Indeed, the out-of-circuit case on

2
USSG 1B1.3, which defines relevant conduct, provides that unless
otherwise specified, specific offense characteristics shall be determined based on
all harm that resulted from or that was the object of all acts and omissions
committed, aided, abetted, counseled, commanded, induced, procured, or willfully
caused by the defendant.
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which defendant reliesUnited States v. Marin, 961 F.2d 493, 496 (4th Cir.
1992)enforced an appellate waiver where the defendant claimed, among other
things, that the district court improperly applied the sentencing guidelines.
Moreover, defendant quotes the courts first sentence that a defendant who
waives his right to appeal does not subject himself to being sentenced entirely at
the whim of the district court but omits the critical next sentence of the opinion:
For example, a defendant could not be said to have waived his right to appellate
review of a sentence imposed in excess of the maximum penalty provided by statute
or based on a constitutionally impermissible factor such as race. Id. (emphasis
added). Here, defendants sentence was within the statutory maximum and was
not based on a constitutionally impermissible factor. See United States v. Johnson,
998 F.2d 941, 943 (9th Cir. 1993) (illegal sentence one . . . not authorized by the
judgment of conviction, . . . in excess of the permissible statutory penalty for the
crime, or . . . in violation of the Constitution); see also United States v. Brizan,
709 F.3d 864, 866 (9th Cir. 2013); United States v. Johnson, 988 F.2d 941, 943
(9th Cir. 1993) (illegal sentence is one which is not authorized by the judgment of
conviction, or is in excess of the permissible statutory penalty for the crime, or is in
violation of the Constitution). To the contrary, defendants claims of error in
calculating his Guidelines range are precisely the type of claims the case he cited
found to be encompassed by an appellate waiver.
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III. Defendant Was The Only One To Breach The Plea Agreement
The government did not breach the plea agreement by arguing at sentencing
that Global VR had suffered a loss. The plea agreements only limitation on loss
was a numerical one a ceiling above which the government could not (and did
not) argue. CR 129 at 6. The agreement contained no limitation as to which losses
could be counted, or what constituted relevant conduct. Id. Moreover, defendant
was sentenced based on a loss amount a third of the ceiling amount to which he
stipulated. Accordingly, the government did not breach the plea agreement.
The only party to breach the plea agreements requirements repeatedly
was defendant. To warrant a downward adjustment for acceptance of
responsibility, defendant agreed to forthrightly admit my guilt, cooperate with the
Court and the Probation Office in any presentence investigation ordered by the
Court, and continue to manifest an acceptance of responsibility through and
including the time of sentencing. CR 129 at 6. Instead, as the Presentence Report
set forth, defendant submitted a 27-page personal statement to the Probation Office
in which he disavowed any responsibility for his criminal conduct. PSR at 106.
At sentencing, he continued to minimize his conduct. As a result of defendants
post-plea conduct, the district court denied defendant credit for acceptance of
responsibility at sentencing. Moreover, before this Court, defendant asserts that he
did not give up his intellectual property rights to the games that he subsequently
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sold. But as the testimony at the evidentiary hearing and the representation letter
and asset purchase agreement established, Global VR purchased all ownership
rights to Ultracades assets and intellectual property. CR 186 at 5-6 (summarizing
testimony and exhibits). That defendant has asserted the contrary post-plea does
not make it true.
Moreover, as part of the agreement, defendant agreed to a broad waiver of
his rights to appeal and collateral review. Id. at 5. Paragraph 4 of defendants Plea
Agreement stated: I agree to give up my right to appeal my convictions, the
judgment, and orders of the Court. I also agree to waive any right I may have to
appeal any aspect of my sentence, including any order relating to forfeiture and/or
restitution. Id. Paragraph 5 of the Plea Agreement stated: I agree not to file any
collateral attack on my conviction or sentence, including a petition under 28 U.S.C.
2255 or 28 U.S.C. 2241, or motion under 18 U.S.C. 3582, at any time in the
future after I am sentenced, except that I reserve my right to claim that my counsel
was ineffective in connection with the negotiation of this Agreement or the entry of
my guilty plea. Id. Despite this waiver, defendant filed an appeal when he had
agreed not to. Defendant seeks to get the benefit of the bargain he struck without
paying the agreed-to price for it.


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IV. The Plea Agreement Was Not Ambiguous As To Loss
Finally, defendant asserts that the plea agreements terms were ambiguous
about what losses could be included, and therefore his appellate waiver is
unenforceable. But the parties stipulated in the plea agreement that the
government could argue for a loss amount of up to $1,589,069, while defendant
could argue for a loss as low as $0. CR 129 at 6. As noted above, the agreement
contained no limitation as to which losses could be counted, or what constituted
relevant conduct. Id. Cf. United States v. Martinez, 77 F.3d 332, 333 (9th Cir.
1996) (parties stipulated in the plea agreement to limit relevant conduct to a
specific amount). The fact that the parties did not reach a stipulation as to those
matters does not make the agreement ambiguous, nor does it allow defendant to
ask this Court to impose such a limitation after the fact.
United States v. Phillips, 174 F.3d 1074, 1076 (9th Cir. 1999), on which
defendant relies, is not to the contrary. In that case, this Court found that a
stipulation regarding restitution was ambiguous where it did not contain a cap on
the amount of restitution and where it could be read either as extending to other
similar acts of tax fraud or as applying also to securities fraud. Id. Here, the
agreement expressly specified a numerical range for amount of loss, and the
conduct for which defendant was sentenced was the same as the conduct with
which he was charged and to which he pleaded guilty. Accordingly, this Court
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should decline to create ambiguity where there is none, and should dismiss
defendants appeal pursuant to the valid appellate waiver to which he agreed.
CONCLUSION
For the foregoing reasons, this Court should dismiss defendants appeal.
DATED: May 5, 2014 Respectfully submitted,

MELINDA HAAG
United States Attorney

BARBARA J . VALLIERE
Assistant United States Attorney
Chief, Appellate Division

/s/ Anne Voigts
ANNE M. VOIGTS
Assistant United States Attorney

450 Golden Gate Ave., 11
th
Floor
San Francisco, CA 94102
Phone: (408) 535-5588

Attorneys for Plaintiff-Appellee
UNITED STATES OF AMERICA

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CERTIFICATE OF COMPLIANCE
I certify that, pursuant to Fed. R. App. P. 27(d), the foregoing is
proportionately spaced, using the Microsoft Word 2010 program, with 14-font size
Times New Roman style, and contains no more than 10 pages.

Dated: May 5, 2014 /s/ Anne Voigts
ANNE M. VOIGTS
Assistant United States Attorney

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CERTIFICATE OF SERVICE
I, Hui Chen, certify that I am an employee of the Office of the United States
Attorney, Northern District of California, a person over 18 years of age and not a
party to the within action. I certify that on May 5, 2014, I electronically filed the
United States Reply in Support of Its Motion to Dismiss Defendants
Appeal

in the case of United States v. David Foley, Nos. 14-10055, 14-10056, with the
Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by
using the appellate CM/ECF system.
I certify that all participants in the case are registered CM/ECF users and
that service will be accomplished by the appellate CM/ECF system.
Dated: May 5, 2014 /s/ Hui Chen
Hui Chen
Legal Assistant

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