Opinion
Case No. 00-40021-01-RDR.
December 22, 2000.
MEMORANDUM AND ORDER
On December 15, 2000, the court sentenced the defendant. The purpose of this memorandum and order is to memorialize the rulings made by the court at that hearing.
The defendant entered a guilty plea to one count of bank fraud in violation of 18 U.S.C. § 1344. The defendant raised several objections to the presentence report. He also filed a motion for downward departure.
OBJECTIONS BY THE DEFENDANT
The defendant initially objects to the inclusion of the incidents involving Eastern Livestock Company as relevant conduct. The government indicates that it is not advocating the incidents involving Eastern Livestock Company as relevant conduct. Given the government's position, the court shall not consider the events concerning Eastern Livestock Company as relevant conduct.
The defendant next objects to the amount of loss involved in his criminal conduct. He contends that Bennington State Bank has suffered no loss because it has been made whole in the defendant's bankruptcy action. The defendant argues that his offense level should be reduced to reflect no loss to the Bank. The defendant further argues that no restitution is owing to the Bank. The government contends that the loss has been correctly computed in the presentence report. The government argues that the court should apply the intended loss rather than the actual loss. The government asserts that any payments made by the defendant as a result of the bankruptcy proceeding are not relevant to determination of the defendant's offense level.
The government bears the burden of proving the amount of loss. United States v. McAlpine, 32 F.3d 484, 487 (10th Cir. 1994). "To meet the requirements of [§ 2F1.1], . . . the record must support by a preponderance of the evidence the conclusion that [the defendant] realistically intended a [particular] loss, or that a loss in that amount was probable." United States v. Smith, 951 F.2d 1164, 1168 (10th Cir. 1991).
In the area of loss, the court is not entirely certain that the decisions in the Tenth Circuit are reconcilable. Nevertheless, the court is persuaded that the latest pronouncement from the Tenth Circuit must be applied. In United States v. Nichols, 229 F.3d 975, 978-79 (10th Cir. 2000), the court provided this guidance on the calculation of loss:
Sentencing Guideline § 2F1.1 governs crimes involving fraud and deceit. . . . Under this guideline, the offense level is calculated based in part on the dollar value of the loss involved in the criminal conduct. See USSG § 2F1.1(b)(1). If an intended loss can be determined and it exceeds the actual loss, the court should use the intended loss to calculate the defendant's offense level. See id., comment. (n. 8); United States v. Smith; (sic) 951 F.2d 1164, 1166 (10th Cir. 1991). The reason the intended loss figure is used, even if it is significantly greater than actual loss, is to measure the magnitude of the crime at the time it was committed. See United States v. Janusz, 135 F.3d 1319, 1324 (10th Cir. 1998). The fact that a victim has recovered part of its loss after discovery of a fraud does not diminish a defendant's culpability for purposes of sentencing. See id. (citing United States v. Johnson, 941 F.2d 1102, 1114 (10th Cir. 1991); United States v. Westmoreland, 911 F.2d 398, 399 (10th Cir. 1990)). It is not error for a district court to count the full amount taken through fraud as an intended loss, where the victim recovers the loss through a civil suit, as opposed to through any voluntary action on the part of the defendant. See Burridge, 191 F.3d at 1301; United States v. Pappert, 112 F.3d 1073, 1079 (10th Cir. 1997). Similarly, the mere presence of collateral securing an item that was fraudulently obtained does not automatically reduce the loss calculation under § 2F1.1 where it can be shown that the defendant intended to permanently deprive the creditor of the collateral through concealment. See United States v. Banta, 127 F.3d 982, 984 (10th Cir. 1997). At the same time, our cases have insisted that calculations under § 2F1.1 accord with "economic reality," particularly considering the value of security given when the loan was made. See United States v. Moore, 55 F.3d 1500, 1502 (10th Cir. 1995); Smith, 951 F.2d at 1167-69.
With these rules in mind, the court is persuaded that the amount of loss that should be used to determine the defendant's offense level is $271,250. This was the fair market value of the cattle sold by the defendant.
The court shall next turn to amount of restitution to be ordered. The government bears the burden of proving the amount of loss when seeking restitution. United States v. Copus, 110 F.3d 1529, 1537 (10th Cir. 1997). A restitution order entered without proof of loss is clearly erroneous. United States v. Herndon, 982 F.2d 1411, 1421-22 (10th Cir. 1992).
The court heard considerable evidence on the issue of restitution. After a careful review of that evidence, the court has determined that no restitution will be ordered here. The court was not persuaded that the government carried its burden as to any specific amount that remained owed to the Bennington State Bank. The evidence was vague and uncertain as to what remains owing the Bank. It is clear that the Bank has received considerable sums in the course of the defendant's bankruptcy proceedings. The amount that remains owning, if any, was not adequately demonstrated by the government. Accordingly, the court shall not order any restitution.
Finally, the defendant contends that the instant offense did not involve more than minimal planning. The government and the probation office disagree.
Under U.S.S.G. § 2B1.1, the court may increase the offense level by two levels if the offense involved more than minimal planning. More than minimal planning means "more . . . than is typical for commission of the offense in simple form. . . . [It] also exists if significant affirmative steps were taken to conceal the offense . . . [and] is deemed present in any case involving repeated acts over a period of time, unless it is clear that each instance was purely opportune." U.S.S.G. § 1B1.1, comment. (n. 1(f)). The enhancement for more than minimal planning is "designed to target criminals who engage in complicated criminal activity because their actions are considered more blameworthy and deserving of greater punishment than a perpetrator of a simple version of the crime." United States v. Rice, 52 F.3d 843, 851 (10th Cir. 1995). The court is convinced that this enhancement should be applied here. The defendant engaged in bank fraud over a four-month period and repeatedly concealed his conduct during that period. The defendant's objection is denied.
MOTION FOR DOWNWARD DEPARTURE
The defendant contends he is entitled to a downward departure based upon U.S.S.G. §§ 5K2.11 (lesser harm), 1A4(d) (aberrant behavior) and 2F1.1, n. 8(b) (overstatement of seriousness of offense). The government argues that a downward departure is not appropriate here.
In United States v. Ziegler, 39 F.3d 1058, 1060-61 (10th Cir. 1994), the Tenth Circuit set forth the following standards for determining when a downward departure is appropriate:
The Sentencing Reform Act allows a sentencing court to depart from the guidelines if "the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines and that should result in a sentence different from that described." 18 U.S.C. § 3553(b); see also U.S.S.G. § 5K2.0, p.s. (1991); U.S.S.G. Ch. 1, Pt. A, intro. comment, at 4(b) (1991). Sentencing courts are instructed "to treat each guideline as carving out a `heartland,' a set of typical cases embodying the conduct that each guideline describes," and consider departure only when the court "finds an atypical case, one to which a particular guideline linguistically applies but where conduct significantly differs from the norm." U.S.S.G. Ch. 1, Pt. A, intro. comment, at 4(b) (1991); 18 U.S.C. § 3553 (b).
Having carefully reviewed the factors suggested by the defendant, the court does not find that a departure from the guidelines is warranted in light of all the circumstances of this case. The factors cited by the defendant — whether considered alone or in combination — are not present to such a degree as to warrant a departure from the sentencing guidelines. The court believes this case falls within the heartland of the guidelines. Accordingly, the defendant's motion for downward departure was denied.
IT IS SO ORDERED.