United States v. Bradley Cornelsen
893 F.3d 1086
8th Cir.2018Background
- Bradley Cornelsen, former CFO of MV Transportation (MVT), was convicted by a jury of five counts of wire fraud based on unauthorized transfers between Jan 2013 and Feb 2015.
- An Ernst & Young audit estimated total fraudulent diversion at $1,453,025.42; the indictment alleged $297,985.13.
- The Presentence Report recommended an actual loss of $1,150,320.09 for Guidelines purposes; the district court adopted that figure after crediting audit and expert testimony.
- The district court ordered restitution of $1,400,320.09 — $1,150,320.09 in losses plus $250,000 in attorney and accounting fees incurred by MVT during private investigation.
- Cornelsen appealed, challenging inclusion of amounts beyond the indictment and of conduct outside the indictment period, and arguing MVT was not a victim for Guidelines or MVRA purposes.
- The Eighth Circuit affirmed the loss calculation and victim status but vacated and remanded the $250,000 award for investigative professional fees in light of the Supreme Court’s decision in Lagos v. United States.
Issues
| Issue | Plaintiff's Argument (Cornelsen) | Defendant's Argument (Government/MVT) | Held |
|---|---|---|---|
| Proper loss amount under U.S.S.G. § 2B1.1 | Loss limited to $297,985.13 alleged in indictment | Court may include related uncharged conduct; district court’s estimate is permissible | Affirmed: district court’s $1,150,320.09 loss upheld (reasonable estimate, deference to credibility findings) |
| Inclusion of uncharged conduct in loss | Uncharged acts/time periods outside indictment cannot be used | Relevant conduct and common scheme may include uncharged acts; loss may reflect entire scheme | Affirmed: uncharged conduct properly included as same course/scheme under § 1B1.3 |
| Whether MVT is a “victim” under Guidelines and MVRA | MVT not a qualifying victim | Corporations qualify; MVT suffered direct pecuniary harm from fraud | Affirmed: MVT is a victim entitled to restitution under MVRA and loss under Guidelines |
| Awarding private investigative/professional fees in restitution | Private investigative/professional fees are not recoverable if outside scope of government investigation/proceedings | Such fees are foreseeable losses caused by fraud and recoverable | Reversed in part and remanded: $250,000 for accounting/attorney fees vacated for reconsideration under Lagos (Supreme Court limits § 3663A(b)(4) to government investigations/proceedings) |
Key Cases Cited
- United States v. Fazio, 487 F.3d 646 (8th Cir.) (district court loss calculations reviewed de novo for law and for clear error on facts)
- United States v. DeRosier, 501 F.3d 888 (8th Cir.) (uncharged related conduct may be included in loss as part of broad scheme)
- United States v. Farrington, 499 F.3d 854 (8th Cir.) (reasonable estimate of loss suffices for sentencing)
- United States v. Chalupnik, 514 F.3d 748 (8th Cir.) (company can qualify as MVRA victim)
- United States v. Lange, 592 F.3d 902 (8th Cir.) (MVRA requires awarding the full amount of a victim's losses)
- United States v. Stennis-Williams, 557 F.3d 927 (8th Cir.) (private investigative costs have been treated as foreseeable restitutionable losses)
- Lagos v. United States, 138 S. Ct. 1684 (2018) (held § 3663A(b)(4) reimbursement for expenses limited to government investigations and criminal proceedings; private professional fees outside that scope are not obligable)