United States of America v. Gale Rachuy

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12‐1376
U NITED STATES OF A MERICA ,
Plaintiff‐Appellee,
v.
G ALE R ACHUY,
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Western District of Wisconsin.
No. 10‐CR‐141 — William M. Conley, Chief Judge.
____________________
A RGUED OCTOBER 4, 2013 — D ECIDED FEBRUARY 14, 2014
____________________
Before EASTERBROOK , R OVNER , and W ILLIAMS, Circuit
Judges.
WILLIAMS, Circuit Judge. By almost all accounts Gale Ra‐
chuy is a career criminal. Rachuy accumulated, over 40
years, nearly 30 convictions, mostly for fraud. He is a man
who has spent many years gaining people’s trust only to
turn around and betray them. In Rachuy’s most recent
scheme, he “purchased” six vehicles by writing bad checks
drawn on four bank accounts that he knew were closed or

-- 1 of 13 --

2 No. 12‐1376
had no funds. Rachuy was indicted on five counts of trans‐
porting stolen vehicles across state lines, but pled guilty to
one count in exchange for a favorable sentencing recom‐
mendation. In exchange for his guilty plea, the government
agreed that it would: (1) recommend that the court calculate
the loss amount based only on the checks returned on the
four bank accounts involved in the purchase of the stolen
vehicles; (2) recommend a five‐year prison sentence; and (3)
not oppose Rachuy’s request for the return of his property
held by local and state authorities.
On appeal, Rachuy raises a number of arguments. First,
he asserts that the government breached the plea agreement
by referencing his lengthy criminal history. But the govern‐
ment did not breach the agreement because it had to refer‐
ence Rachuy’s criminal history in order to justify an above‐
Guideline range sentence. Second, he argues that the gov‐
ernment failed to recommend that his loss amount be based
solely on the checks used to purchase the vehicles charged in
the superseding indictment. However, the government did
not breach the deal because it was authorized, per the
agreement, to include in the loss calculation any relevant
bad checks drawn on the accounts that Rachuy used to steal
cars. Third, he contends that the government breached the
agreement by opposing his request for the return of his
property. Here, too, the government did not breach the
agreement because it did not “oppose” his motion in the
formal sense, but simply reminded the court that it did not
have the power to command local and state authorities to
release Rachuy’s property. Fourth, he claims that the district
court abused its discretion by failing to hold an evidentiary
hearing on his request for the return of his property. But the
district court was not required to hold a hearing because his

-- 2 of 13 --

No. 12‐1376 3
motion improperly asked the court to exceed its jurisdiction,
and the court properly dismissed the complaint on jurisdic‐
tional grounds. Finally, Rachuy asserts that the district court
failed to give him credit, pursuant to U.S.S.G. § 5G1.3(b)(1),
for time served on a sentence for a related state conviction.
However, Rachuy was not eligible to be sentenced under
§ 5G1.3(b)(1) since he did not meet the statute’s require‐
ments. Because the district court did not commit any errors,
we affirm the court’s judgment.
I. BACKGROUND
Between April and August 2010, Gale Rachuy “pur‐
chased” six cars by writing bad checks drawn on accounts
that he knew were either closed or had no funds, and then
drove the cars away. Ultimately, he was charged with five
counts of transporting a stolen vehicle across state lines, in
violation of 18 U.S.C. § 2312.
On November 8, 2011, Rachuy entered into a written plea
agreement with the government where, in exchange for his
plea on one count of transporting a stolen vehicle, the gov‐
ernment made the following promises:
4. … [T]o recommend that the court calculate loss
amount based only on the checks returned on the four
bank accounts involved in the purchase of the vehi‐
cles charged in the superseding indictment …
5. [T]o jointly recommend that the court impose a
five‐year sentence of imprisonment …
6. [N]ot to oppose any request by Rachuy for return
of any of his property currently held in the custody of
state or local authorities.

-- 3 of 13 --

4 No. 12‐1376
On the same day, the district court accepted Rachuy’s guilty
plea.
While he was represented by counsel, Rachuy filed a pro
se motion for the return of seized evidence and property
with the district court, asking for an order directing state
and local authorities to return the evidence they seized dur‐
ing searches of his homes and automobiles. The government
filed its own motion, arguing that Rachuy’s motion should
be denied because he: (1) was represented by counsel; (2) cit‐
ed no authority to support his request for the district court to
order local law enforcement agencies holding his property to
return it; and (3) was pursuing the same relief in state court
without the government’s opposition. The district court
agreed with the government’s position and denied Rachuy’s
motion.
On February 3, 2012, the district court held a sentencing
hearing at which both sides made a joint recommendation of
60 months’ imprisonment. Although this was above Ra‐
chuy’s advisory Guidelines range of 37 to 46 months, the
government filed a sentencing memorandum explaining that
the upward variance was warranted because of Rachuy’s ex‐
tensive criminal history and likelihood of recidivism.
At the start of the hearing, the district court calculated
Rachuy’s Guidelines range and noted “that this defendant
has almost 30 convictions over some 40 years, most of which
involve fraud … which is an extraordinary criminal history
for this court to consider, much less comprehend.” The dis‐
trict court then invited the government to present its posi‐
tion on sentencing.

-- 4 of 13 --

No. 12‐1376 5
The government stated that it “echo[ed] what the Court
ha[d] already said, that one would be hard‐pressed to find a
defendant with a longer criminal history for fraud than Mr.
Rachuy. He’s a perfect example of why perhaps there should
be a career offender provision for white‐collar defendants as
well.”
The government then urged the district court to accept
the parties’ joint recommendation, and sentence Rachuy to
60 months’ imprisonment. The defense attorney reiterated
the parties’ recommendation, but the district court judge
remarked, “I’m having substantial trouble arriving at 60
months given your client’s behavior here … . My problem is,
I’m looking at 40 years of this same behavior. I’m just
astounded by this criminal record.”
Ultimately, the district court concluded that Criminal
History Category VI significantly underrepresented the seri‐
ousness of his criminal history, and rejected the parties’ rec‐
ommendation. Instead of sentencing Rachuy based on the
parties’ joint recommendation, the court sentenced him to 90
months’ imprisonment based on its determination that he “is
the epitome of a career offender” and that “[his crime is] just
the latest in a string of fraudulent schemes spanning his en‐
tire adult life.” The court also stated that, “if federal law and
the guidelines recognize[d] [the] status [of] white‐collar
fraud, [Rachuy] could well be Exhibit A.” Even though the
court felt that 120 months’ imprisonment was justified given
Rachuy’s conduct, the court settled on 90 months based on
“the requests and the input of counsel.” Rachuy now ap‐
peals.

-- 5 of 13 --

6 No. 12‐1376
II. ANALYSIS
A. The Prosecution Did Not Breach the Plea Agreement
Rachuy maintains that the government materially
breached the plea agreement in three ways, namely by: (1)
inducing the district court to impose a sentence above the
recommended 60 months by highlighting Rachuy’s criminal
history; (2) failing to recommend the agreed‐upon loss
amount at sentencing; and (3) opposing Rachuy’s pro se mo‐
tion for return of his property. Because Rachuy did not raise
the first two issues before the district court at sentencing, we
review for plain error. United States v. Winters, 695 F.3d 686,
689 (7th Cir. 2012). “Under the plain error standard, we will
reverse the district court’s sentencing determination only
when we find: (1) an error or defect; (2) that is clear or obvi‐
ous; (3) affecting the defendant’s substantial rights; (4) and
seriously impugning the fairness, integrity, or public reputa‐
tion of judicial proceedings.” United States v. Goodwin, 717
F.3d 511, 518 (7th Cir. 2013) (internal quotations omitted).
The parties dispute whether Rachuy raised the third pur‐
ported breach below, but we do not need to decide the mat‐
ter because Rachuy loses even under the most generous
standard.
This court analyzes plea agreements using ordinary con‐
tract principles. United States v. Schilling, 142 F.3d 388, 394
(7th Cir. 1998). When the terms of the agreement are unam‐
biguous, we apply the plain meaning of those terms. United
States v. O’Doherty, 643 F.3d 209, 217 (7th Cir. 2011). To suc‐
ceed on a claim, the defendant must show a material breach;
a minor breach will not warrant resentencing or withdrawal
of a guilty plea. United States v. Diaz‐Jimenez, 622 F.3d 692,
694 (7th Cir. 2010).

-- 6 of 13 --

No. 12‐1376 7
Rachuy contends that the government broke its promise
to recommend a sentence of 60 months’ imprisonment at
sentencing by paying “lip service” to the joint recommenda‐
tion, while simultaneously undermining it by citing his
lengthy criminal history. A prosecutor may breach the plea
agreement by making a sentencing recommendation pursu‐
ant to the agreement, and then attempting to augment the
ultimate sentence by referencing aggravating circumstances
of the defendant’s case. See United States v. Salazar, 453 F.3d
911, 914 (7th Cir. 2006). That is not what occurred here.
During the sentencing hearing, the government unques‐
tionably mentioned Rachuy’s lengthy criminal history, and
even went so far as to say that “Rachuy’s a perfect example
of why perhaps there should be a career offender provision
for white‐collar defendants as well.” From the sentencing
transcript, it appears that the district court relied on the gov‐
ernment’s representations in imposing a higher‐than‐
recommended term of imprisonment—the court even par‐
roted the “career offender” characterization used by the
government.
However, simply because the government referenced Ra‐
chuy’s criminal history does not mean that the government
breached its agreement with him. Rachuy’s Guidelines range
was 37 to 46 months, but the government and Rachuy’s joint
recommendation of 60 months was an upward departure
that the government had to justify. The primary means for
the government to justify the upward departure was to ref‐
erence Rachuy’s criminal history. Moreover, the government
honored its obligation in that it never advocated for a higher
sentence. Instead, it urged the court to impose a 60‐month
sentence. See Salazar, 453 F.3d at 914–15 (finding no substan‐

-- 7 of 13 --

8 No. 12‐1376
tial breach of plea agreement when the government made
necessary recommendation and “did not request a higher
sentence or remind the judge that he need not abide by the
agreement”). The government, on numerous occasions, rec‐
ommended that Rachuy receive the agreed‐upon 60‐month
sentence. Therefore, the government’s conduct did not con‐
stitute a breach of the plea agreement.
In his second breach‐related claim, Rachuy contends that
the government failed to recommend that his loss amount be
based solely on the checks used to purchase the vehicles
charged in the superseding indictment, but his claim rests on
a mischaracterization of the plea agreement. The govern‐
ment promised to recommend a loss amount “based only on
the checks returned on the four bank accounts involved in
the purchase of the vehicles charged in the superseding in‐
dictment.” So, the unambiguous terms of this clause do not
mandate that the loss calculation be based only on the four
checks upon which Rachuy’s criminal charges were based.
Instead, the government was authorized to include any rele‐
vant bad checks from the accounts that Rachuy used to steal
cars. As a result, both the checks that Rachuy issued to steal
the cars charged in the indictment as well as any other
checks he issued from those same accounts would be rele‐
vant conduct for sentencing purposes. The government’s
loss calculation was consistent with the terms of the plea
agreement, and because Rachuy cannot show a breach of
this provision, he cannot prevail on plain error review.
In his third breach‐related claim, Rachuy contends that
the government breached the plea agreement by opposing
his pro se Federal Rule of Criminal Procedure 41(g) motion
for the return of seized property. Rachuy argues that de no‐

-- 8 of 13 --

No. 12‐1376 9
vo review is appropriate because, before filing his motion for
the return of his property with the district court, he made it
clear in his pro se motion and in several letters to the district
court that he would hold the government to its promise not
to oppose the motion. This, he alleges, preserved the argu‐
ment for appellate review because the district court was
alerted that any government opposition would breach the
plea agreement. As support, he points to a First Circuit case,
United States v. Gonczy, which states that an “objection is suf‐
ficiently raised as long as it brings the purported breach of
the plea agreement to the district court’s attention.” 357 F.3d
50, 52 (1st Cir. 2004). The government, on the other hand, ar‐
gues that plain error review is the appropriate standard be‐
cause Rachuy did not formally object at the district court
level.
We do not need to decide which standard applies be‐
cause Rachuy loses under either standard. In the plea
agreement between the parties, the United States agreed not
to oppose Rachuy’s request for the return of his property
that was held by state or local authorities. On December 19,
2011, Rachuy filed a pro se motion in federal court for the
return of evidence seized by state and local authorities. In
response, the government filed a motion asserting that there
was no basis for making the claim in federal court because
the property was in the custody of the state authorities and
that the proper forum for his request was in state court. Af‐
ter considering the government’s response, the district court
denied Rachuy’s motion, partly for jurisdictional reasons.
We conclude that the government’s response to Rachuy’s
motion did not constitute a breach because the government
did not “oppose” Rachuy’s motion in a legal sense. Rather,

-- 9 of 13 --

10 No. 12‐1376
the government simply alerted the court to the limits of its
jurisdiction, which this court has said that all parties should
do. See Hart v. Terminex Int’l, 336 F.3d 541, 544 (7th Cir. 2003)
(“We … emphasize that this waste of federal judicial re‐
sources and delay of justice was avoidable and reiterate our
admonitions to future litigants to meticulously review the
limits of federal jurisdiction”). Rachuy’s request was not
made in the proper forum because he asked a federal district
court to order state authorities to turn over his property they
seized in connection with a state prosecution against him.
This is power that a federal district court does not have the
authority to exercise. See generally Smith v. Phillips, 455 U.S.
209, 221 (1982) (“Federal courts hold no supervisory authori‐
ty over state judicial proceedings.”).
Rachuy’s claim would have merit if he alleged that the
government opposed the motions he made in state court.
However, the government did not file a motion in opposi‐
tion to the motion Rachuy filed in state court. When Rachuy
made appropriate requests for return of his property in state
court, the government lived up to its end of the bargain and
did not oppose those requests. Because the government did
not oppose Rachuy’s motion, but simply alerted the federal
court to the boundaries of its jurisdiction (something this
court encourages parties to do), the government did not
breach its agreement with Rachuy.
B. No Abuse of Discretion in Denying Rachuy’s Re‐
quest for an Evidentiary Hearing
Rachuy contends that the district court abused its discre‐
tion because it failed to hold an evidentiary hearing on his
request for return of his property. We review a district
court’s denial of a Rule 41(g) motion for return of seized

-- 10 of 13 --

No. 12‐1376 11
property for abuse of discretion. Stevens v. United States, 530
F.3d 502, 506 (7th Cir. 2008). A court abuses its discretion
when it makes an error of law or when it makes a clearly er‐
roneous finding of fact. United States v. Freeman, 650 F.3d 673,
678–79 (7th Cir. 2011).
As we previously mentioned, Rachuy’s motion was
properly dismissed on jurisdictional grounds. When a court
finds that it lacks jurisdiction, it is improper for it to proceed
to the merits of the issue. “Without jurisdiction the court
cannot proceed at all in any cause. Jurisdiction is the power
to declare the law, and when it ceases to exist, the only func‐
tion remaining to the court is that of announcing the fact and
dismissing the cause.” Steel Co. v. Citizens for a Better Env’t,
523 U.S. 83, 94 (1998) (internal quotation marks omitted).
The district court did not abuse its discretion by denying the
motion without holding an evidentiary hearing because
there was no need to accept evidence.
C. No Plain Error Regarding Credit for Time Served
Rachuy asserts that he should have been sentenced under
U.S.S.G. § 5G1.3(b) rather than under § 5G1.3(c), and given
credit for a sentence he received for a related fraud convic‐
tion in Minnesota. We do not agree. This court’s review of
sentencing decisions proceeds in two steps. United States v.
Jackson, 547 F.3d 786, 792 (7th Cir. 2008). First, we ensure that
the district court did not commit any “significant procedural
error,” including failing to calculate, or improperly calculat‐
ing, the applicable Guidelines range, treating the Guidelines
as mandatory, or failing to consider the § 3553(a) factors. Id.
Once convinced that the sentencing judge followed correct
procedure, we then consider the reasonableness of the sen‐
tence. Id. In conducting this review, we will generally set

-- 11 of 13 --

12 No. 12‐1376
aside factual findings underlying the sentence only if they
are clearly erroneous, and review questions of law de novo.
United States v. Bothun, 424 F.3d 582, 586 (7th Cir. 2005).
However, because Rachuy did not raise this issue below, we
review the district court’s decision for plain error. United
States v. Martin, 692 F.3d 760, 763 (7th Cir. 2012).
Because Rachuy’s Minnesota conviction was not the basis
for an offense‐level increase, the option of being sentenced
under § 5G1.3(b) was not available to him. Under § 5G1.3(c),
a sentencing judge has the discretion to impose a sentence
that runs concurrently with a prior undischarged term of
imprisonment, which the court did here by ordering Ra‐
chuy’s federal sentence to run concurrently with his Minne‐
sota sentence. Rachuy would prefer to be sentenced under
§ 5G1.3(b) because when that provision applies, the court
may adjust the sentence “for any period of imprisonment
already served on the undischarged term of imprisonment if
the court determines that such period of imprisonment will
not be credited to the federal sentence by the Bureau of Pris‐
ons.” § 5G1.3(b)(1). A sentencing judge looks to § 5G1.3(b)
only if that “term of imprisonment resulted from another
offense that is relevant conduct to the instant offense of con‐
viction … and was the basis for an increase in the offense
level for the instant offense.” United States v. Broadnax, 536
F.3d 695, 700 (7th Cir. 2008). Before a defendant can benefit
from this section, he must show that both elements of
§ 5G1.3(b) are met. Id. at 701.
Rachuy is not eligible to be sentenced under § 5G1.3(b)
because he does not meet both elements. Rachuy satisfies the
first condition set out in § 5G1.3(b) because his Minnesota
conviction was the relevant conduct in the instant offense.

-- 12 of 13 --

No. 12‐1376 13
But, he fails to meet the second condition of § 5G1.3(b) be‐
cause his Minnesota conviction was not the basis for an of‐
fense‐level increase. In his plea agreement, Rachuy agreed
that the government would recommend that the court calcu‐
late loss“ based only on the checks returned on the four bank
accounts involved in the purchase of the vehicles charged in
the superseding indictment.” The loss amount associated
with these four accounts for both state and federal cases to‐
taled $136,398.63. The government subtracted $14,279.32—
the amount associated with his Minnesota state conviction—
from $136,398.63, to arrive at a loss amount of $122,119.71.
This $122,119.71 figure was the loss amount only associated
with the federal case and on which Rachuy’s offense level
was based.
Therefore, we conclude that the district court correctly
calculated Rachuy’s Guidelines range. Pursuant to U.S.S.G.
§ 2B1.1(b)(1)(F), any monetary losses between $120,000 and
$199,999 result in a 10‐level increase in offense level. Even
without the $14,279.32 loss from the Minnesota conviction,
Rachuy’s total loss amount was still above the $120,000
threshold necessary to trigger the 10‐level increase. Ulti‐
mately, even though the state conviction was included as
relevant conduct, Rachuy received no criminal history points
for that offense, and the loss associated with it was not used
to calculate his offense level. Given that the state conviction
was not “the basis for an increase in the offense level” for
Rachuy’s federal transporting stolen vehicle conviction, he
was not eligible to be sentenced under § 5G1.3(b) and the
court did not err by sentencing him under § 5G1.3(c).
III. CONCLUSION
The judgment of the district court is A FFIRMED.

-- 13 of 13 --