UNITED STATES of America, Plaintiff-Appellee v. Coleman CARPENTER, Defendant-Appellant
No. 15-3563
United States Court of Appeals, Eighth Circuit.
Submitted: September 23, 2016. Filed: November 23, 2016.
841 F.3d 1057
David Wayne Camp, Law Office of David W. Camp, Jacskson, TN, for Defendant-Appellant.
Coleman Carpenter, Pro Se.
Before WOLLMAN, BRIGHT, and KELLY, Circuit Judges.
BRIGHT, Circuit Judge.
The government charged Coleman Carpenter with mail and wire fraud arising from a scheme in which he overpaid for commodities to the benefit of certain customers while managing a grain elevator for Bunge of North America (Bunge). After Carpenter pleaded guilty to one count of mail fraud, the district court sentenced him to twelve months and one day in prison. The district court also ordered him to pay $1,561,516.25 in restitution to Bunge, which included $87,536.65 in attorney‘s fees and expenses Bunge paid to an outside counsel during the investigation of Carpenter‘s fraudulent scheme and his prosecution.
Carpenter appeals arguing the district court erred in calculating the amount of restitution, and by including the attorney‘s fees from Bunge‘s outside counsel in the restitution award. We affirm the portion of the district court‘s restitution award which does not include attorney‘s fees ($1,473,980.00), but vacate the portion awarding attorney‘s fees and expenses ($87,536.65), and remand to the district court for further proceedings.
I
Bunge, a global agriculture commodities business, employed Carpenter as the manager of a grain elevator in Hickman, Kentucky. Bunge authorized Carpenter to purchase agricultural commodities, which included corn, wheat and soybeans, from producers and merchants “on the spot.” In addition, Carpenter could enter into futures contracts for commodities to be delivered at a later date.
Futures contracts had two components: the futures price and the basis. The first component—the futures price—was set by commodities markets. Bunge provided Carpenter access to the current futures prices electronically and through a commercial trading desk (hedge desk) located at its St. Louis, Missouri headquarters. Carpenter was authorized to establish the futures price component of the per bushel price for a particular futures contract based upon the current futures price as determined by the Chicago Board of Trade (CBOT).
The second component—the basis1—was set by Bunge and depended on various market conditions, such as location of a point of purchase, operational needs of Bunge, and prices offered by a competitor. Bunge gave Carpenter the authority to “push the basis” in order to respond to changing market conditions or the operational needs of Bunge, but limited this authority to $.08 per bushel at the most. So, for example, if the basis at a given time was $-.15, Carpenter had the authority to push it to $-.07.
Thus, Carpenter inflated the futures price component of the contract by $.7225 per bushel based on the CBOT current futures prices, or by $.6325 per bushel based on the CBOT high price of the day. After adjusting for the basis, the amount Bunge lost on this single contract was $43,350, as measured by the difference between the $5.63 futures price utilized by Carpenter and the approved CBOT current futures price of $4.9075 (60,000 bushels x $.7225). Carpenter then misrepresented these unauthorized transactions in mailings to Bunge headquarters.
During the scheme, Carpenter received large payments of money from some of the grain elevator customers. For example, in consecutive years in March 2009 and 2010, Carpenter received $10,000 checks from Ronnie Bates Farms, one of the grain elevator‘s customers. Carpenter‘s bank account also showed large cash deposits made between 2009 and 2013 totaling over $38,000. Carpenter denies the cash deposits he made to his bank account during that time were related to the fraud scheme.
In 2013, Bunge discovered Carpenter‘s fraud during an internal audit. Bunge asked the Thompson Coburn law firm in St. Louis to assist in reviewing and assessing Carpenter‘s unauthorized transactions, while at the same time providing information to the government for potential criminal charges against Carpenter. Thompson Coburn assisted Bunge and the government in reviewing the transactions both before and after a federal grand jury returned an indictment against Carpenter on June 25, 2014. After being charged, Carpenter pleaded guilty to one count of mail fraud in violation of
Prior to sentencing, a probation officer prepared a Presentence Investigation Report (PSR) which, in part, calculated the amount of loss that resulted from Carpenter‘s fraud pursuant to United States Sentencing Guidelines Manual (U.S.S.G.)
At sentencing, the district court adopted the parties’ agreement as to amount of loss to calculate Carpenter‘s advisory guidelines range, and then turned to the separate issue of determining the amount of loss for purposes of restitution. The district court agreed the precise amount of restitution was difficult to calculate because the market price at the exact time of
Bunge also sought restitution for the attorney‘s fees it paid to outside counsel prior to and during the government‘s investigation. Carpenter objected to the attorney‘s fees arguing, in part, that fees incurred after the government started its investigation were not “necessary.” See
II
We review the district court‘s decision to award restitution for abuse of discretion, but any fact findings as to the amount are reviewed for clear error. United States v. Chalupnik, 514 F.3d 748, 752 (8th Cir. 2008). “The government bears the burden of proving the amount of restitution based on a preponderance of the evidence.” United States v. Frazier, 651 F.3d 899, 903 (8th Cir. 2011).
A. The Overpayments
Carpenter contends the district court erred in awarding the initial $1,473,980.00 in restitution (the amount less the attorney‘s fees) for two reasons. First, Carpenter contends the amount of restitution is difficult, if not impossible, to determine and is not warranted. See
With respect to Carpenter‘s first argument, we have consistently held that “the district court has wide discretion in ordering restitution.” United States v. DeRosier, 501 F.3d 888, 897 (8th Cir. 2007). When determining restitution, “the district court need make only a reasonable estimate of the loss, and we accord particular deference to the loss determination because of the district court‘s unique ability to assess the evidence and estimate the loss.” Id. at 895 (quoting United States v. Scott, 448 F.3d 1040, 1044 (8th Cir. 2006)). In cases where the amount of loss (and by extension the amount of restitution) caused by fraud is difficult to calculate, “a district court is charged only with making a reasonable estimate of the loss.” United States v. Parish, 565 F.3d 528, 534 (8th Cir. 2009) (internal quotation marks and citation omitted).
Carpenter‘s claim that the loss was impossible to calculate is belied by his own
We see no grounds for reversing the district court‘s decision to choose the one-day method over the two-day method. As we previously stated, exact precision is not necessary when determining loss, only a reasonable estimate. Either method the district court would have chosen here would have been reasonable, as both methods underestimated Bunge‘s actual loss. The times when Carpenter made unauthorized transactions occurred throughout each day, not necessarily every time the CBOT price was at its highest. For example, in the August 2013 purchase of corn discussed above, the CBOT current futures price provided to Carpenter at the time of sale was $4.9075, while the highest price paid on the CBOT that day for corn was $4.9975, a difference of $.09 per bushel, or a total of $5400 for the 60,000 bushel sale. The one-day method used by the district court did not capture the additional $5400 Bunge lost on this particular sale (as reflected in the PSR at ¶ 20, which only reported a loss of $37,950 on this particular transaction rather than the $43,350 Bunge actually lost), or the similar amounts Bunge lost on Carpenter‘s many other fraudulent transactions. Because the exact times of the unauthorized trades could not be determined, the use of the CBOT daily high price automatically ensured that Bunge‘s actual loss would be underestimated under both methods of calculation.
Carpenter next argues that Bunge did not sustain a loss (and by extension was not entitled to restitution) because Bunge recouped his overpayments at the time of its sale. The district court used the correct standard of lost profits to determine Bunge‘s loss. See United States v. Chalupnik, 514 F.3d 748, 755 (8th Cir. 2008). Here, Bunge‘s lost profits were based on the difference between the authorized purchase price and the amount of Carpenter‘s unauthorized purchases. The lost profits remained constant regardless of the resale price. Finally, Bunge does not have exclusive control over the sale price as Carpenter seems to contend. The commodities market is a global market that dictates the sale price. The district court properly determined that the loss sustained by Bunge was the total amount of lost profits and that the lost profits remain constant regardless of the sale price.
B. The Attorney‘s Fees
Carpenter contends that attorney‘s fees incurred by Bunge‘s outside counsel after the government took over the investigation were not “necessary” under
Our circuit has taken a somewhat broader view of the loss that can be included in a restitution award, and have “specifically approved of the inclusion of attorney‘s fees and investigative costs in a restitution award when these losses were caused by the fraudulent conduct.” DeRosier, 501 F.3d at 897 (citing United States v. Akbani, 151 F.3d 774, 780 (8th Cir. 1998); United States v. Piggie, 303 F.3d 923, 928 (8th Cir. 2002)). As Carpenter contends, however, the fact that there is no per se prohibition on awarding restitution for attorney‘s fees or investigative costs does not relieve the government from satisfying the statutory requirement of showing such costs were “necessary ... expenses incurred during participation in the investigation or prosecution of the offense.”
Carpenter‘s specific objection in the district court was that outside attorney‘s fees incurred by Bunge after the government initiated its own investigation were unnecessary. The record does not show the district court ever directly addressed that claim, or made a specific finding that the fees were necessary. Instead, the district court only appears to have addressed Carpenter‘s other objections to the attorney‘s fees submitted by outside counsel. We therefore vacate the district court‘s award of attorney‘s fees and expenses and remand to the district court to specifically address whether the attorney‘s fees incurred after the government initiated its own investigation were “necessary” under
III
We affirm that portion of the district court‘s restitution order awarding $1,473,980.00. We vacate the portion of the district court‘s restitution order awarding attorney‘s fees and remand for further proceedings consistent with this opinion.