United States v. Evans
677 F. App'x 469
10th Cir.2017Background
- Evans owned a real-estate development firm that raised investor funds via three limited partnerships to buy, renovate, and sell apartment complexes.
- Projects experienced cash-flow problems by April 2005; Evans contributed about $4.5 million of his own funds, commingled funds, and made misleading reports to investors and lenders.
- Fraud was discovered in April 2007; a receiver was appointed, additional investor money was injected, and properties later foreclosed.
- Evans pleaded guilty to conspiracy to commit mail and wire fraud; originally sentenced to 14 years and $12.3M restitution after guideline enhancements for amount of loss and number of victims.
- On the first appeal (Evans I), the Tenth Circuit vacated the sentence and instructed the district court to calculate the reasonably foreseeable loss to the securities beginning at the time the fraud began.
- On remand the district court, finding the April 2005 property values indeterminate, adopted a "loss of equity" theory (~$4M), reapplied a victims enhancement (50–249 victims), resentenced Evans to 10 years 1 month, and ordered ~$4M restitution.
Issues
| Issue | Plaintiff's Argument (Government) | Defendant's Argument (Evans) | Held |
|---|---|---|---|
| Whether Evans I controls law of the case on remand | Evans I did not preclude reconsideration because new evidence on appraisal difficulties and magnitude of fraud existed | Evans I established law of the case and remand instructions must be followed | Evans I is law of the case; government failed to show substantially different evidence to avoid it; Evans I controls |
| Proper method to calculate loss for guideline enhancement | A reasonable loss estimate could be based on liens/encumbrances during the fraud (loss-of-equity theory) | Loss must start from value of securities when fraud began per Evans I; government failed to prove that value | District court erred: loss-of-equity approach did not follow Evans I and was unsupported; loss enhancement vacated |
| Validity of number-of-victims enhancement | Even if loss calculation changed, victims enhancement still appropriate based on investors affected | Victims enhancement depends on an actual loss; without proven loss, there are no victims for §2B1.1(b)(2) | Court erred to apply victims enhancement because government failed to prove actual loss; enhancement vacated |
| Whether sentencing and restitution errors are harmless | Even without enhancements, court said it would have imposed the same sentence; errors harmless | Sentence relied on clearly erroneous factual findings (e.g., Evans "stole" funds); restitution not supported by proof of actual loss | Errors not harmless: alternative rationale included clearly erroneous findings; restitution order vacated and must be recomputed on proper proof |
Key Cases Cited
- United States v. Evans, 744 F.3d 1192 (10th Cir. 2014) (earlier panel opinion establishing remand instructions for loss calculation)
- Gall v. United States, 552 U.S. 38 (2007) (standard of review for sentencing abuses of discretion)
- Koon v. United States, 518 U.S. 81 (1996) (when an invalid factor may have affected sentencing, remand is required)
- United States v. Kirk, 894 F.2d 1162 (10th Cir. 1990) (government bears burden to prove facts supporting guideline enhancements)
- Mitchell v. Maynard, 80 F.3d 1433 (10th Cir. 1996) (standards for reassignment to preserve appearance of justice)
- United States v. Hudson, 483 F.3d 707 (10th Cir. 2007) (restitution must be based on actual loss proven by a preponderance)