Opinion
Case No. 4:21-cr-00138-SMR-HCA-1
2022-10-03
UNITED STATES of America, Plaintiff, v. Andrew Robert ERPELDING, Defendant.
Adam J. Kerndt, Craig P. Gaumer, United States Attorney's Office, Des Moines, IA, Babasijibomi Asiwaju Moore, United States Department of Justice, Washington, DC, for Plaintiff.
Adam J. Kerndt, Craig P. Gaumer, United States Attorney's Office, Des Moines, IA, Babasijibomi Asiwaju Moore, United States Department of Justice, Washington, DC, for Plaintiff. ORDER ON MOTION TO RECONSIDER RESTITUTION STEPHANIE M. ROSE, CHIEF JUDGE
Defendant Andrew Robert Erpelding pled guilty to one count of Conspiracy to Commit Wire Fraud Affecting a Financial Institution, in violation of 18 U.S.C. § 1349. [ECF No. 18]. The Court sentenced Defendant to time served, with a term of supervised release, and restitution. [ECF No. 52] (sealed). The restitution amount is joint and several with his other co-defendants.
I. BACKGROUND
Defendant previously served as the vice-president and regional manager of Valley Bank in Moline, Illinois. From September 2011 to November 2014, he conspired with three other individuals to defraud the Small Business Administration ("SBA") by submitting applications for loan guarantees with altered loan histories. If these loans defaulted, the SBA would bear the loan losses. The goal of Valley Bank was to shift potential loan losses to the SBA. Defendant's Draft Pre-Sentence Report ("Draft PSR") identified the realized loss to the SBA as $2,102,150.19. [ECF No. 30 ¶ 30 n.2] (sealed). On January 11, 2022, Defendant filed objections to the Draft PSR, but none pertained to the total loss. See [ECF No. 34] (sealed). A final PSR was filed on the docket on March 10, 2022. [ECF No. 37] (sealed). Defendant's sentencing hearing was held on August 2, 2022. [ECF No. 50]. The Court imposed a sentence of time served, a 5-year term of supervised release, and restitution in the amount of $2,102,150.19. [ECF No. 52] (sealed). Defendant did not appeal his sentence.
The SBA would not have otherwise guaranteed the loans if the documents had not been fraudulently modified.
On August 30, 2022, Defendant filed this Motion asking the Court to reduce the total restitution he must pay. [ECF No. 53]. He contends his financial situation has materially changed since the sentencing hearing and the information in the Final PSR is no longer accurate. According to financial documents Defendant submitted to the Government and the Court in support of this Motion, he now has a negative monthly cash flow and a dwindling amount of assets. Defendant states that he has future financial obligations related to a family medical situation. He argues it would be unjust to collect his limited remaining financial assets based on his role in the conspiracy and his current financial circumstances. Defendant represents the United States Probation Office ("USPO") has agreed to a $250 per month restitution payment plan. [ECF Nos. 53 at 2; 62 at 4] (sealed). He asks the Court to reduce his overall restitution amount so that his payments of $250 per month would end with his five-year term of supervised release. This would result in a total of $15,000.00 in restitution rather than the $2,102,150.19 ordered at sentencing. The Government resists Defendant's request.
II. DISCUSSION
The Government argues that Defendant's request is not statutorily authorized, procedurally improper, untimely, and his argument for a reduction in the restitution apportioned to him has been waived. Defendant responds that the law allows for modification of restitution orders based on material changes in economic circumstances, his request is not procedurally defective, and any waiver of his argument on apportionment between co-defendants was the result of confusion by his counsel at the sentencing hearing.
A. Restitution
In a case like this, restitution is "mandatory" and must be imposed "without consideration of the economic circumstances of the defendant." United States v. Miller, 419 F.3d 791, 794 (8th Cir. 2005) (quoting 18 U.S.C. 3664(f)(1)(A)). A defendant's ability to pay restitution is only relevant for "determining whether restitution should be paid by lump sum, a schedule of payments, or nominal payments." Id. (quoting United States v. Gray, 175 F.3d 617, 617-18 (8th Cir. 1999)).
An order of restitution is a final judgment and federal law enumerates the specific instances where it can be adjusted. 18 U.S.C. § 3664(o). A restitution order can be adjusted to correct an arithmetical or technical error within 14 days of sentencing. Id. § 3664(o)(1)(A); Fed. Crim. P. 35(a). It may also be "appealed and modified" under the normal criminal appeal process. 18 U.S.C. § 3664(o)(1)(B). If at the time of sentencing, a victim's losses cannot be reliably ascertained, the Court may set a date for final determination within 90 days of sentencing. Id. §§ 3664(o)(1)(C), (d)(5). Finally, a restitution order can be adjusted pursuant to 18 U.S.C. § 3664(k). Id. § 3664(o)(1)(D).
B. Procedural Vehicle
The procedural basis for Defendant's Motion is unclear. He disclaims that it is a motion under Federal Rule of Civil Procedure 59 but rather "a motion to reconsider the restitution order." [ECF No. 62 at 5] (sealed); see Fed. R. Civ. P. 59(e) (providing "[a] motion to alter or amend a judgment must be filed no later than 28 days after the entry of the judgment."). Defendant points to case law that he claims indicates the United States Court of Appeals for the Eighth Circuit is open to allowing Rule 59(e) motions in a criminal case. [ECF No. 62 at 5] (sealed) (citing United States v. Luger, 837 F.3d 870, 875 (8th Cir. 2016) (noting "[a]lthough this court has never had occasion to do so, courts in other Circuits have held that this civil standard applies to motions for reconsideration raised in criminal cases outside of the suppression context.").
The Government rejects Defendant's Rule 59 argument. It contends that there is no basis to apply Rule 59 here and finality is especially important in the criminal context. This finality is evidenced by the narrow deadlines imposed by the Federal Rules of Criminal Procedure, which does not contain a counterpart to Rule 59. The Court agrees with the Government that Rule 59 is not a proper vehicle to challenge a final, criminal judgment. A defendant would not be permitted to request a shorter term of imprisonment via a motion derived from the Federal Rules of Civil Procedure. The same goes for an order of restitution, which is a criminal penalty. See United States v. Ross, 279 F.3d 600, 609 (8th Cir. 2002) (citation omitted).
Defendant alternatively relies on Section 3664(k) to support his Motion. That provision provides in relevant part,
A restitution order shall provide that the defendant shall notify the court and the Attorney General of any material change in the defendant's economic circumstances that might affect the defendant's ability to pay restitution[.] . . . Upon receipt of the notification, the court may, on its own motion, or the motion of any party, including the victim, adjust the payment schedule, or require immediate payment in full, as the interests of justice require.18 U.S.C. § 3664(k). Section 3664(k) appears inapposite of Defendant's request. Here, he seeks not to "adjust the payment schedule" or pay his restitution order in full, but seeks a reduction in the total amount of restitution he owes. See [ECF No. 62 at 4] (sealed) (acknowledging that Defendant and the USPO "have agreed on an initial restitution payment schedule of $250 per month," but requesting "that the monthly contribution end after five years.").
A plain reading of § 3664(k) indicates that a material change in a defendant's economic circumstances may support adjustment of the payment schedule but not the total amount of restitution owed. Such a reading is consistent with the dictates of other provisions of the law. 18 U.S.C. § 3664(f)(1)(A) ("In each order of restitution, the court shall order restitution to each victim in the full amount of each victim's losses as determined by the court and without consideration of the economic circumstances of the defendant.").
Defendant asserts that § 3664(k) implies that the finality interest in criminal judgment is lessened when it pertains to restitution orders. However, Defendant is not seeking an adjustment to his payment schedule, he is requesting an overall reduction in restitution. This makes clear that his request is not a motion under Section 3664(k) for an adjusted payment schedule, he seeks a reopening of his criminal judgment for a 99.3% reduction in his restitution obligation.
C. Waiver
The final issue is whether Defendant waived his arguments with respect to the amount of restitution to be paid. Defendant insists that the Court should reconsider the total restitution award due to confusion at his sentencing hearing. He claims that his counsel intended to present argument on the restitution amount. The Government contends that any argument on the overall restitution has been waived.
Defendant did not assert any challenge to the total restitution amount prior to this point. Additionally, he did not object to the restitution in the Draft PSR. See Fed. R. Crim. P. 32(i)(3)(A) (providing the court "may accept any undisputed portion of the presentence report as a finding of fact."). Before the hearing, Defendant submitted a memorandum describing his position on a downward variance, explaining his minor role in the conspiracy, and offering mitigating circumstances for the Court to consider at his sentencing. [ECF No. 46] (sealed). Nowhere in his sentencing memorandum does he address his restitution or provide any basis for why he should be apportioned less than the full of amount of loss to the SBA. At no time during the sentencing hearing did Defendant's counsel mention restitution either.
Defendant's Motion attributes this failure to provide any argument on restitution apportionment to procedural confusion at the sentencing hearing. [ECF No. 62 at 6]. However, at the close of the hearing the Court directly asked counsel whether there were any remaining issues for her client, to which she responded in the negative. [ECF No. 60 at 16 ln. 2-3] (sealed).
III. CONCLUSION
Defendants insists the Motion is based on newly discovered evidence regarding a material change in his economic circumstances but also argues that the "missed opportunity to address restitution at the sentencing hearing is a proper basis for a motion to reconsider." [ECF No. 62 at 6] (sealed). He notes that his monthly cash flow is already negative prior to the implementation of his payment plan. The newly discovered evidence regarding his family's expenses bears little relation to the relief he seeks because his $250 per month payment plan has already been agreed to by the USPO and any adjustment to his restitution order which would not have effect for another five years. These explanations are unconvincing and Defendant's Motion to Reconsider Restitution is DENIED. [ECF No. 53].
IT IS SO ORDERED.