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Click here for the full text of this decision FACTS:Mohammad Gharbi was one of 20 defendants who were involved in a large-scale conspiracy to defraud various lenders by obtaining residential real estate loans by means of materially false statements. The conspiracy included, among others, real estate agents, loan processors, appraisers, straw buyers and sellers, real estate brokers and an attorney. The conspirators’ typical practice was to purchase a property, obtain a falsely inflated appraisal, and then resell the property and pocket the profit. Mohammad, who was a real estate agent in the Austin area, bought and sold properties as part of the conspiracy. Mohammad’s primary trial attorney was David Reynolds. On the morning of trial, Reynolds informed the district court that he needed assistance in trying the case and sought to enlist Steve Brittain as co-counsel. The government objected to this arrangement, arguing that Brittain had a conflict of interest, because he also represented Mohammad’s daughter, Maryam Gharbi, who was a co-defendant and potential witness in Mohammad’s case. Brittain had represented Maryam in negotiating a plea bargain under which she agreed to testify against her father if called by the government. At the time of the trial, the district judge had not yet accepted Maryam’s guilty plea. Reynolds explained that he and Brittain had erected a “Chinese Wall” between them and that Brittain would not share any confidential information received from Maryam. Reynolds also stated that Brittain would not cross-examine Maryam in the event she appeared as a witness at trial. Both Mohammad and Maryam testified that they understood and waived any potential conflicts. Nonetheless, the district court found the conflict of interest to be unwaivable and denied Reynolds’ request to associate Brittain as co-counsel. After a five-day trial, a jury convicted Mohammad on one count of conspiracy to commit mail fraud; two counts of mail fraud; one count of wire fraud; and one count of bank fraud. At sentencing, the Presentencing Report (PSR) and Addendum described how Mohammad fraudulently obtained more than $1 million in loans and recommended Mohammad’s offense level be enhanced to a minimum of 24 under the U.S. Sentencing Guideline �2B1.1(13)(A). The government argued in support of this enhancement, but Mohammad objected, contending he should not be charged with loan amounts that were used to retire pre-existing liens on the subject properties. The district court agreed Mohammad should not be charged with loan amounts that went to pay these “legitimate” debts and declined to apply the �2B1.1(13)(A) enhancement. Mohammad’s offense level was set at 15, with an advisory range of 18 months to 24 months of imprisonment. The district court then sentenced Gharbi below the advisory range, to a prison term of 12 months and one day, five years of supervised release, restitution in the amount of $84,914 and a $500 special assessment. An appeal and cross-appeal followed. Mohammad argued that he was deprived of his Sixth Amendment right to choice of counsel and was entitled to a new trial. The government argued that the district court misinterpreted �2B1.1(13)(A) of the guidelines and maintained that Gharbi’s offense level should have been enhanced under this provision. HOLDING:The court affirmed the conviction, but it vacated the sentence and remanded it for resentencing. Mohammad contended that the district court violated his Sixth Amendment right to choice of counsel by denying Reynolds’ request to associate Brittain. The Sixth Amendment to the Constitution guarantees that “[i]n all criminal prosecutions, the accused shall enjoy the right . . . to have the Assistance of Counsel for his defence.” Part of this guarantee, the court stated, is a criminal defendant’s right to retain the attorney of his choice. There is a presumption, the court elaborated, in favor of a defendant’s counsel of choice, but that presumption may be overcome by an actual conflict of interest or by a showing of a serious potential for conflict. If a court justifiably finds an actual conflict of interest, “there can be no doubt that it may decline a proffer of waiver,” the court stated. The court found no abuse of discretion by the district court. The district court began with the presumption that Gharbi was entitled to counsel of his choice. Nonetheless, the court found, for a number of reasons, that the presumption was overruled by an irreconcilable conflict of interest. For example, the district court noted that Maryam might well be called to testify against her father. If she were called, the district court found it ” ‘impossible to guess’ ” whether Mohammad’s combined defense team ” ‘would pull punches’ ” on cross-examination, thereby providing ineffective assistance to Mohammad. The court noted that the district court was also aware of the opposite risk, that Mohammad’s counsel could attack Maryam, jeopardizing her plea agreement. In the district court’s judgment, the serious potential for conflict could not be resolved by Reynolds’ proposed arrangements. “ In order to protect the rights of all parties and preserve the appearance of fairness,” the court wrote, the district court held that the two needed separate and independent counsel. In its cross-appeal, the government contested the district court’s decision not to enhance Mohammad’s offense level under �2B1.1(13)(A). The court found that Mohammad derived $233,200 on the sale of the Waterline property, $332,500 on his repurchase of the Waterline property, $233,100 on the purchase of the 806 1/2 13th Street property and $30,000 on the Meehan property, for a subtotal of $828,800. Gharbi derived at least $185,197 on the Demarrett transactions; thus, his gross receipts exceeded $1 million and the sentencing enhancement from �2B1.1(13)(A) applied. Because the district court erroneously omitted this enhancement from the offense level, the court vacated and remanded the matter for resentencing under the appropriate advisory guidelines range. OPINION:Jones, J.; Jones, C.J., and DeMoss and Stewart, JJ.

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