                                                                     [DO NOT PUBLISH]


                 IN THE UNITED STATES COURT OF APPEALS
                                                                              FILED
                           FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                             ________________________ ELEVENTH CIRCUIT
                                                                         JUNE 21, 2005
                                    No. 04-13458                       THOMAS K. KAHN
                              ________________________                     CLERK


                          D. C. Docket No. 03-00191-CR-C-S

UNITED STATES OF AMERICA,


                                                                      Plaintiff-Appellant,

                                           versus

MICHAEL MARTIN,

                                                                      Defendant-Appellee.


                              ________________________

                      Appeal from the United States District Court
                         for the Northern District of Alabama
                            _________________________

                                     (June 21, 2005)

Before BLACK and HULL, Circuit Judges, and O’KELLEY *, District Judge.

PER CURIAM:


       *
       Honorable William C. O’Kelley, United States District Judge for the Northern District
of Georgia, sitting by designation.
      Defendant-appellee Michael Martin, a former HealthSouth Corporation

(“HealthSouth”) executive, pled guilty to conspiracy to commit securities fraud

and mail fraud and falsify books and records, in violation of 18 U.S.C. § 371, and

falsifying books and records, in violation of 15 U.S.C. §§ 78m(b)(2)(A),

78m(b)(5), and 78ff, 17 C.F.R. § 240.13b2-1, and 18 U.S.C. § 2. At sentencing,

the district court properly calculated the guidelines sentence range as 108 to 135

months’ imprisonment. The district court then granted the government’s § 5K1.1

motion for downward departure based on Martin’s substantial assistance. Instead

of departing to 62 months’ imprisonment, as recommended by the government, the

district court imposed a sentence of 60 months’ probation. The government now

appeals the extent of the district court’s downward departure. After review and

oral argument, we vacate Martin’s sentence in its entirety and remand this case to

the district court for resentencing.

                                 I. BACKGROUND

A. Factual Background

      From 1996 through March 2003, a group of HealthSouth officers conspired

to artificially inflate HealthSouth’s reported earnings, earnings per share, and

overall financial condition. As a result, HealthSouth’s public financial records

overstated its assets by hundreds of millions of dollars, and public investors



                                           2
purchased overvalued shares of HealthSouth’s stock. According to the presentence

investigation report (“PSI”) prepared in this case, the approximate amount of the

loss to HealthSouth investors was $1.4 billion.

      Defendant Martin was employed by HealthSouth from 1989 to 2000, and

served as its Chief Financial Officer (“CFO”) from 1997 to 2000. During his

tenure as CFO, Martin was aware that HealthSouth’s earnings would not meet

expectation. According to Martin, at the direction of the Chief Executive Officer

(“CEO”), Martin falsified numbers to inflate HealthSouth’s stated earnings to meet

expectation. During the period in which Martin served as CFO, he knowingly

falsified the numbers virtually every month. Martin repeatedly discussed with the

CEO the fact that the income statements provided to the Securities and Exchange

Commission (“SEC”) and the investors were inaccurate. Martin nevertheless

signed HealthSouth’s 10-Q and 10-K forms from 1997 to 1999, with the

knowledge that the attached financial statements misrepresented the company’s

financial condition.

B. Procedural History

      On April 8, 2003, the government filed a three-count information against

Martin, charging him with: (1) one count of conspiracy to commit securities fraud

and mail fraud and falsify books and records, in violation of 18 U.S.C. § 371



                                          3
(Count One); and (2) one count of falsifying books, records, and accounts, in

violation of 15 U.S.C. §§ 78m(b)(2)(A), 78m(b)(5), and 78ff, 17 C.F.R. §

240.13b2-1, and 18 U.S.C. § 2 (Count Two). The information also included a

forfeiture count (Count Three). Pursuant to a plea agreement, Martin pled guilty to

all three counts.

      The PSI indicated that Martin’s offense level was 31 and his criminal history

category was I, resulting in a guidelines sentence range of 108 to 135 months’

imprisonment.

      On June 16, 2004, the government filed a motion for downward departure

pursuant to U.S.S.G. § 5K1.1 based on Martin’s substantial assistance. In that

motion, the government explained that “[f]rom the discovery of the defendant’s

participation in the conspiracy,” Martin had been truthful and cooperated “without

hesitation,” had been available “on a continuous and regular basis,” and had

“provided valuable assistance in helping the United States, HealthSouth, and the

forensic auditor discover, in an expeditious manner, the varied ways in which the

massive fraud at HealthSouth was conducted.” Specifically, the motion explained

that Martin “provided direct evidence of the former CEO’s knowledge of the fraud

at HealthSouth,” including “evidence of direct conversations about the fraud with

the former CEO.” The government’s motion further stated that “[t]he defendant’s



                                         4
assistance has aided both the securing of guilty pleas from other co-conspirators

and the investigation of other individuals yet to be prosecuted,” and that Martin’s

“immediate cooperation allowed the HealthSouth case to be prosecuted at a pace

which, on a relative basis, constitutes swift and efficient enforcement of the United

States’ criminal laws.”

      On June 19, 2004, the district court held a sentencing hearing. The district

court adopted the PSI’s calculations that Martin’s offense level was 31, his

criminal history category was I, and his guidelines sentence range was 108 to 135

months’ imprisonment. The district court then heard from the government about

its § 5K1.1 motion. The government described Martin’s assistance as valuable,

and, in response to the district court’s questions, clarified that of the HealthSouth

defendants from whom the district court had taken guilty pleas, Martin and one

other defendant had direct connections with the former HealthSouth CEO. The

government also explained that Martin had tried to talk the CEO into ending the

fraudulent conduct and, when those efforts failed, resigned from HealthSouth in

2000. The government further described Martin’s assistance as “equal to or greater

than the assistance” provided by others who had come before the Court to date.

      At that time, the district court announced that it would depart downward

from level 31 to level 10, which, when combined with a criminal history category



                                           5
I, yielded a sentence of 6 to 12 months’ imprisonment. The district court then

heard Martin’s mitigation arguments, including testimony from counsel for the

victims, who described Martin’s unusual cooperation not only with the government

but also with the victims of the fraud.

      In response, the government argued that, while Martin’s assistance was

valuable, Martin nevertheless was “the most culpable of those who have been

sentenced to date,” that “[h]e was the most senior officer, he had the most

authority, and he was involved the longest,” and that “he obtained substantial

income and status, social status, from this position at HealthSouth,” at a huge loss

to the victims. The government further stated, with regard to the need for

deterrence:

      Finally, Your Honor, you asked a question as to why someone like
      Mr. Martin would do something like this. I would suggest that part of
      the reason was the culture, the corporate culture, that existed at
      HealthSouth during that period of time. Our fear is that that corporate
      culture existed in many, many other corporations; and perhaps exists
      today in many other corporations. We suggest that a light sentence
      does nothing to [a]ffect that corporate culture. What I’m speaking of,
      of course, is the deterrent value of a sentence in this case.

The government also objected to the district court’s decision to depart downward

to level 10. Instead, the government suggested that a level 25 and sentence of 62

months’ imprisonment would be appropriate. In the event that the district court

decided to depart to a level 10 over its objection, the government recommended the

                                          6
maximum possible sentence in that range.

      The district court then engaged in the following dialogue with the

government:

      THE COURT:                  And were I to impose the sentence that the
                                  government recommends, the government
                                  would retain the right at the end of the
                                  [former CEO] trial to make a motion for a
                                  further reduction of Mr. Martin’s sentence,
                                  which might include probation?
      MR. RASMUSSEN:              It could theoretically include probation,
                                  Your Honor. However, the factors that I’ve
                                  listed today would militate against that. So I
                                  cannot – I hesitate to commit that we would
                                  –
      THE COURT:                  But you would have the –
      MR. RASMUSSEN:              – we would have the authority.
      THE COURT:                  – you would have the authority to do it?
      MR. RASMUSSEN:              Yes, sir. Yes, sir. So we would like to make
                                  sure that –
      THE COURT:                  So it may be a question of whether you’re
                                  going to grant probation or I’m going to do
                                  it.

      The district court then summarily imposed a sentence of 60 months’

probation with a special condition of 6 months’ home detention on each of Counts

One and Two, to run concurrently. The government objected to the reasonableness

of the extent of the departure.

      In its written judgment, the district court checked the box stating that the

downward departure was “based on 5K1.1 motion of the government based on the



                                           7
defendant’s substantial assistance,” and offered no further reasons.



       The government timely appealed the district court’s downward departure.

                                     II. DISCUSSION

       On appeal, the government argues that: (1) the extent of the downward

departure and resulting sentence were unjustified and unreasonable; and (2) that

the district court failed to adequately and specifically state the reasons for its

departure.1

       Section 5K1.1 of the United States Sentencing Guidelines specifies that the

district court may depart downward based on the defendant’s substantial assistance

       for reasons stated that may include, but are not limited to,
       consideration of the following factors:
       (1)   the court’s evaluation of the significance and usefulness of the
             defendant’s assistance, taking into consideration the
             government’s evaluation of the assistance rendered;
       (2)   the truthfulness, completeness, and reliability of any
             information or testimony provided by the defendant;
       (3)   the nature and extent of the defendant’s assistance;
       (4)   any injury suffered, or any danger or risk of injury to the
             defendant or his family resulting from his assistance;
       (5)   the timeliness of the defendant’s assistance.

U.S.S.G. § 5K1.1(a) (emphasis added). The commentary to § 5K1.1 recognizes

that “the [n]ature, extent, and significance of assistance can involve a broad


       1
        We review the extent of a departure for an abuse of discretion. See United States v.
Blas, 360 F.3d 1268, 1274 (11th Cir. 2004).

                                                8
spectrum of conduct that must be evaluated by the court on an individual basis,”

and thus that latitude is afforded the sentencing judge to reduce a sentence based

on “variable relevant factors.” U.S.S.G. § 5K1.1 comment. (backg’d.). “The

sentencing judge must, however, state the reasons for reducing a sentence under

this section.” Id. (citing 18 U.S.C. § 3553(c)) (emphasis added).2 Thus, the

guidelines require that the district court’s stated reasons must be individualized to

the defendant based on the relevant factors and more specific than a simple

statement that the reduction is based on the defendant’s substantial assistance.

Further, the commentary to § 5K1.1 requires the sentencing court to give

“substantial weight . . . to the government’s evaluation of the extent of the

defendant’s assistance . . . .” U.S.S.G. § 5K1.1, comment. n.3.

       The government did not raise any Booker issue in its appeal, and thus there

is no Booker-type issue that we must review in this appeal. Rather, this appeal

concerns only the application of § 5K1.1 of the guidelines to Martin’s sentence.3

       2
        Pursuant to 18 U.S.C. § 3553(c), if the district court imposes a sentence “outside the
[guidelines] range, . . . the specific reason for the imposition of a sentence different from that
described, . . . must also be stated with specificity in the written order of judgment and
commitment . . . .”
       3
          Martin was sentenced prior to the Supreme Court’s decision in United States v. Booker,
— U.S. —, 125 S. Ct. 738 (2005). Although there is no Booker issue that this Court must
review in this appeal, Booker will come into play at resentencing. Accordingly, while the
district court will not be bound by the guidelines on remand, it first must correctly determine
Martin’s guidelines sentence, including any departures permitted under the guidelines, and then
impose a sentence that is reasonable in light of the factors set forth in 18 U.S.C. § 3553(a). See
United States v. Crawford, 407 F.3d 1174, 1178 (11th Cir. 2005) (stating that “the Supreme

                                                  9
This Court reviews a downward departure from the guidelines range for

“reasonableness.” See United States v. Blas, 360 F.3d 1268, 1274 (11th Cir.

2004). In Blas, we explained that “a reviewing court determines the

reasonableness of the departure in light of the factors to be considered in imposing

the sentence and the reasons the district court provided for departing.” Id.; see also

Williams v. United States, 503 U.S. 193, 203, 112 S. Ct. 1112, 1121 (1992). “The

district court’s reasons must be sufficiently specific so that an appellate court can

engage in the meaningful review envisioned by the Sentencing Guidelines.”

United States v. Suarez, 939 F.2d 929, 933 (11th Cir. 1991). Although we need

not decide whether the district court must discuss each of the five factors set forth

in § 5K1.1, we conclude the district court must, at a minimum, give some

indication of the § 5K1.1 factors upon which it relies and the reasons for the extent

of the departure.

       Here, the district court granted Martin an extraordinary departure, departing

downward by 21 levels and eliminating a 108 to 135-month term of




Court concluded in Booker that district courts must still consider the Guidelines in determining a
defendant’s sentence,” and that remand is required in any case in which the sentence was
imposed as a result of an incorrect guidelines application (citation omitted)). If the district court
imposes a sentence outside the guidelines range, it must state the reasons for the imposition of
that sentence. 18 U.S.C. § 3553(c).

                                                 10
imprisonment.4 Yet the district court failed to specify any reasons, either orally or

in his written statement of reasons, for this extraordinary departure. It is unclear

from the record (1) whether the district court relied upon permissible factors5 and

(2) if so, whether the extent of the departure was reasonable. As a result, the

record in this case is incapable of meaningful appellate review. “Although the

district court has broad discretion in determining the extent of a downward

departure, that discretion is not without limits, and appellate review is not an empty

exercise.” United States v. Dalton, 404 F.3d 1029, 1034 (8th Cir. 2005).

Particularly in light of the extraordinary departure in this case, we will not presume

that the extent of the departure was reasonable. See id. at 1033.6



       4
          Martin argues that this Court cannot review the reasonableness of the district court’s
downward departure because the government invited the error. We reject this argument. The
government moved the district court to depart downward based on Martin’s substantial
assistance. The government does not challenge the district court’s decision to depart. Rather,
the government challenges the extent of the departure as unreasonable. The government did not
invite the extent of the departure granted in this case, and in fact vigorously objected to it in the
district court.
       5
         There is some indication in the record that the district court’s extraordinary departure
possibly was based in part on its view that the government could, or even would, later seek a
further reduction of Martin’s sentence pursuant to Rule 35 of the Federal Rules of Criminal
Procedure – an impermissible basis for a § 5K1.1 departure. However, because the district court
failed to provide any reasons for the extent of its departure, we cannot determine on this record
whether the district court’s basis for departure was permissible.
       6
         We reject Martin’s argument that we must affirm because the government did not object
in the district court to the district court’s failure to specify the reasons for its departure. The
government did object in the district court to the unreasonableness of the extent of the departure
and has preserved that objection on appeal, and this Court cannot determine the reasonableness
issue without knowing the reasons for the departure.

                                                  11
      Accordingly, we vacate Martin’s sentence and remand this case to the

district court for resentencing consistent with this opinion and with the Supreme

Court’s decision in Booker.

      VACATED AND REMANDED.




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